Job creation slowed in October to its weakest pace since late 2020 as the effects of storms in the Southeast and a significant labor market impasse dampened the employment picture.
The Bureau of Labor Statistics reported Friday that nonfarm payrolls rose by 12,000 during the month, down sharply from September and below the Dow Jones estimate of 100,000. In what was already expected to be a downbeat report, October recorded the smallest increase since December 2020.
However, the unemployment rate held steady at 4.1%, in line with expectations. The broader measure of unemployment that includes discouraged workers and those holding part-time jobs for economic reasons was also unchanged at 7.7%.
In reporting, the BLS noted that a Boeing strike would likely result in 44,000 job cuts in the manufacturing sector, which lost 46,000 jobs overall.
In addition, the report noted the impact of Hurricanes Helen and Milton, but said “it is not possible to determine the net impact” of the storms on total jobs. The Bureau of Labor Statistics noted that survey responses for its Enterprise Survey, which shows key nonfarm job gains, were “well below average” and in fact the lowest in more than 30 years, but said that was the case for areas affected by the crisis. The storm as well as those outside the area.
Elsewhere, the bureau said average hourly earnings rose 0.4% during the month, slightly above estimates, although a 4% increase over 12 months was in line. The average work week remained steady at 34.3 hours.
However, markets largely shrugged off the bad news, as stock market futures braced for a strong open on Wall Street while Treasury yields fell. Poor jobs numbers along with wages in line with expectations are helping to fuel another interest rate cut from the Federal Reserve next week.
“At first glance, the October jobs report paints a picture of increasing fragility in the US labor market, but beneath the surface is a muddy report affected by climate and labor disruptions,” said Corey Stahl, an economist at Indeed Hiring Lab. “While the impacts of these events are real and should not be ignored, they are likely temporary and not a sign of a labor market collapse.”
This release comes a few days before the presidential election, in which most opinion polls show it to be a deadlock race between Democrat Kamala Harris and Republican Donald Trump. With the economy at the forefront of the battle, the light jobs number “casts a dark pall over next week,” said Lisa Sturtevant, chief economist at Bright MLS.
The weak October report also included significant downward revisions from previous months. August was downgraded to an increase of just 78,000 while the initial estimate for September fell to 223,000. Together, the net revisions reduced previously announced total job creation by 112,000.
Once again, health care and government led job creation, adding 52,000 and 40,000 jobs, respectively. However, many sectors saw job losses.
In addition to the expected decline in manufacturing, temporary help services saw a decline of 49,000. This category is sometimes viewed as an indicator of the strength of core jobs and has seen a decline of 577,000 since March 2022, the BLS said.
Another leading sector, leisure and hospitality, saw a decline of 4,000, while retail, transport and warehousing also recorded modest declines.
In the household survey, which is used to calculate the unemployment rate, employment figures were weaker.
This showed a decrease in the number of people reporting jobs by 368,000 and a shrinkage in the workforce by 220,000 people. Full-time employment fell by 164,000, while the number of part-time workers fell by 227,000.
The report covers a month in which Hurricanes Helen and Milton pummeled the Southeast — Florida and North Carolina in particular — while the Boeing strike also hit a vibrant, though sluggish, labor market. Recent developments suggest that Boeing’s predicament may be about to end.
Before the release, job creation averaged nearly 200,000 per month through 2024, about 60,000 below the pace of the same period last year although it still indicates a strong pace of hiring.
Some cracks in recent months have raised concerns at the Federal Reserve that although the pace of inflation is slowing year-on-year, higher interest rates could weigh on the labor market and threaten the ongoing economic expansion.
As a result, in September policymakers took an unprecedented step for the growing economy, cutting the benchmark short-term interest rate by half a percentage point, double the usual quarter-point increases that the Fed typically prefers to move.
Financial markets expect a strong possibility that the central bank will cut by a quarter of a percentage point in each of its two remaining meetings this year. The Federal Open Market Committee, which sets interest rates, is scheduled to announce its decision next Thursday.
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