The U.S. labor market experienced a sharp slowdown in job growth in October, with employers adding only 12,000 jobs, a significant drop from the 223,000 jobs created in September, according to the Labor Department. This latest data is especially noteworthy as it comes just days before Americans head to the polls to elect the next president.
Despite the decline in hiring, the unemployment rate remained steady at 4.1%. The report highlighted continued growth in healthcare and government positions; however, the manufacturing sector saw a substantial decrease in employment due to ongoing strikes.
Notably, about 30,000 workers at Boeing have been on strike since September 13, resulting in a significant decline in aircraft production. Additional walkouts at Textron, another aerospace company, have further impacted job numbers. Overall, manufacturing employment dropped by 46,000 in October, with the Labor Department attributing this decline largely to strike activity, particularly a loss of 44,000 jobs in transportation equipment manufacturing.
Economists had anticipated a more robust job growth figure, predicting an increase of 113,000 jobs based on previous trends. Brian Coulton, chief economist at Fitch Ratings, noted that the strikes were not factored into last month’s jobs data, which contributed to the disappointing figures. “At face value, the 12,000 increase is obviously a weak number but it follows a very robust increase in September and was affected by strikes and possibly by the hurricanes,” Coulton stated.
Hurricanes Helene and Milton struck the southeastern U.S. in late September and early October, respectively, causing significant disruption. According to the Labor Department, 512,000 people reported being unable to work due to extreme weather conditions. Despite this unexpected slowdown, many analysts remain optimistic that the Federal Reserve will proceed with a 0.25 percentage point interest rate cut in the coming week.
Seema Shah, chief global strategist at Principal Asset Management, commented, “Markets can likely park the October jobs report to the side. Quite clearly, the hurricane has taken a heavy toll on the numbers, clouding the picture of labor market strength, and so should not impact the Fed’s policy rate path.”
Similarly, Lindsay Rosner from Goldman Sachs Asset Management expressed a hopeful outlook, saying, “Stormy numbers but sky clearing for November 25 bp cut.”
The Labor Department acknowledged that the lower-than-expected job additions were likely influenced by the hurricanes, indicating that its survey methodology does not specifically isolate the effects of extreme weather. Over the past year, job growth has been gradually slowing, and while the unemployment rate has edged higher, it remains at historically low levels. Additionally, average hourly earnings have seen a 4% increase over the past twelve months.
In the previous month, the Federal Reserve enacted a larger-than-usual rate cut of 0.5 percentage points, citing a desire to bolster the labor market against potential weakening.
