In October, job creation slowed to its weakest pace since late 2020, as the impacts of storms in the Southeast and a significant impasse in the labor market dented the employment situation.
Nonfarm payrolls rose 12,000 for the month, down sharply from September and below the Dow Jones estimate of 100,000, the Bureau of Labor Statistics reported Friday. In what was already expected to be a pessimistic report, October saw the smallest gain since December 2020.
The unemployment rate, however, remained at 4.1%, in line with expectations. A broader measure of unemployment, which includes discouraged workers and those in part-time employment for economic reasons, also remained unchanged at 7.7%.
In the report’s narrative, the BLS noted that the Boeing strike probably eliminated 44,000 jobs in the manufacturing sector, which lost 46,000 positions in total.
Along with this, the report highlights the impact of Hurricanes Helene and Milton, but states that “it is not possible to quantify the net effect” of the storms on total employment.
Elsewhere, the bureau reported that average hourly earnings rose 0.4% for the month, slightly above the estimate, although the 4% year-over-year gain was in line. The average work week remained stable at 34.3 hours.
Markets, however, largely ignored the bad news, with stock futures set for a strong open on Wall Street as Treasury yields plunged. The meager employment numbers along with wages roughly in line with expectations help cement another interest rate cut from the Federal Reserve next week.
“At first glance, the October jobs report paints a picture of growing fragility in the U.S. labor market, but beneath the surface lies a murky relationship, unsettled by climate and labor disruptions,” he said. said Cory Stahle, economist at Indeed Hiring Lab. “While the impacts of these events are real and should not be ignored, they are likely temporary and are not a sign of a labor market collapse.”
The release comes just days before presidential election in which Democrat Kamala Harris and Republican Donald Trump find themselves in what most polls show is a deadlocked race. With the economy at the forefront of the battle, the light employment numbers “cast a murky shadow heading into next week,” said Lisa Sturtevant, chief economist at Bright MLS.
The weak October report also included significant downward revisions from previous months. August was reduced to a gain of just 78,000, while September’s initial estimate had fallen to 223,000. Together, the net revisions reduced the previously reported job creation totals by 112,000.
Health care and government once again led job creation, adding 52,000 and 40,000 positions, respectively. Several sectors, however, experienced job losses.
In addition to the expected decline in manufacturing, temporary help services saw a decline of 49,000. This category is sometimes considered an indicator of underlying employment strength and saw a decline of 577,000 since March 2022, the BLS said.
Another leading sector, leisure and hospitality, saw a drop of 4,000, while retail and transport and warehousing also saw slight declines.
In the household survey, which is used to calculate the unemployment rate, the hiring figures were even lower.
This shows that 368,000 fewer people reported being employed and the labor force decreased by 220,000. Full-time employment decreased by 164,000, while part-time employment decreased by 227,000.
The report covers a month in which Hurricanes Helene and Milton battered the Southeast – Florida and North Carolina in particular – while the Boeing strike also hit a buoyant, albeit slowing, labor market . Recent developments indicate that Boeing’s impasse may be nearing an end.
Before this publication, job creation had averaged nearly 200,000 per month in 2024, around 60,000 fewer than for the same period last year, but this remains indicative of a pace of hiring solid.
Some cracks in recent months have raised fears at the Federal Reserve that even if the pace of year-over-year inflation slows, high interest rates could impact the labor market and threaten the ongoing economic expansion.
As a result, policymakers in September took an unprecedented step for a growing economy and lowered their benchmark short-term interest rate by half a percentage point, double the usual increases of a quarter point that the Fed usually likes to move.
Financial markets are pricing in a high probability that the central bank will cut rates by a quarter point at each of its two remaining meetings this year. The Federal Interest Rate Setting Committee will announce its decision next Thursday.
