Job creation slowed to the weakest pace since late 2020 in October, as the effects of storms in the Southeast and a major labor stalemate hit the employment situation.
Nonfarm payrolls increased by 12,000 jobs in the month, a sharp drop from September and below the Dow Jones estimate of 100,000 jobs, the Bureau of Labor Statistics said Friday. Already expected to be a pessimistic report, October recorded the smallest increase since December 2020.
Meanwhile, the unemployment rate remained at 4.1%, in line with expectations. A broader measure of unemployment, which includes discouraged workers and those in part-time work for financial reasons, was also unchanged at 7.7%.
The BLS said in its report that the Boeing strike could have resulted in the loss of 44,000 manufacturing jobs and 46,000 jobs overall.
In addition to this, the report also noted the impact of hurricanes Helen and Milton, but said it was “impossible to quantify the ultimate impact” of the storms on total employment. The BLS noted that business survey responses showing major nonfarm payroll increases were “well below average” and were in fact the lowest in more than 30 years, but they did not account for major disaster losses. He said this applies to both regions. So are the storms and the people outside the zone.
Elsewhere, the agency said average hourly wages rose 0.4% in the month, slightly more than expected but in line with the 4% increase over the 12-month period. The average number of hours worked per week remained unchanged at 34.3 hours.
But the market largely ignored the bad news, with stock market futures poised to open solidly on Wall Street as Treasury yields plummeted. Weak job numbers and wages broadly in line with expectations are helping to ensure the Federal Reserve will cut interest rates again next week.
“At first glance, the October jobs report paints a picture of increasing fragility in the U.S. labor market, but beneath the surface it is reeling from climate change and labor disruption,” said Cory Stahl, economist at Indeed Employment Lab. This is a disgusting report.” “While the impact of these events is real and should not be ignored, it is likely to be temporary and does not indicate a collapse of the job market.”
The announcement came just days before the presidential election, where most polls show a close race between Democrat Kamala Harris and Republican Donald Trump. With the economy on the front lines of the battle, light payrolls numbers “cast a dark shadow heading into next week,” said Lisa Sturtevant, chief economist at Bright MLS.
The weak October report also included a significant downward revision from the previous month. The number of people increased by only 78,000 in August, and the initial forecast for September was 223,000. In total, the net revisions reduced the previously reported total job creation by 112,000 jobs.
Health care and government once again led the way in job creation, adding 52,000 and 40,000 jobs respectively. However, some sectors saw job losses.
In addition to the expected decline in manufacturing, the number of temporary support services also fell by 49,000. The category, which is sometimes considered to represent potential employment strength, has declined by 577,000 jobs since March 2022, according to the BLS.
Leisure and hospitality, another major sector, lost 4,000 jobs, while retail and transportation and warehousing also reported smaller declines.
The household survey, which is used to calculate the unemployment rate, showed the number of employed people was even lower.
This showed 368,000 fewer people reported holding jobs and a 220,000 fewer people in the labor force. Full-time employment decreased by 164,000, and part-time employment decreased by 227,000.
The report notes that Hurricanes Helen and Milton hit the Southeast, particularly Florida and North Carolina, while the Boeing strike also hit a vibrant but slowing labor market. It covers a period of several months. Recent developments suggest Boeing’s impasse may be nearing an end.
Before the announcement, the number of jobs created in 2024 was expected to average nearly 200,000 per month, about 60,000 less than the same period last year, but still showing a steady pace of employment.
Although some cracks in recent months have slowed the year-over-year pace of inflation, there are concerns at the Fed that rising interest rates could impact the labor market and threaten continued economic expansion. It is occurring.
As a result, policymakers took unprecedented steps to boost economic growth in September, cutting benchmark short-term interest rates by half a percentage point. This is twice the conventional quarter-point increments that the Fed typically prefers.
Financial markets are pricing in the possibility that the central bank will cut interest rates by a quarter of a percentage point at each of its two remaining meetings this year. The Federal Open Market Committee, which decides interest rate settings, will announce its decision next Thursday.
