Only 12,000 jobs created in October for a nation of over 325 million LOL!
Job growth slowed sharply last month, with workers sidelined by hurricane effects and the continuing Boeing strike.
The Labor Department on Friday reported that the economy added a seasonally adjusted 12,000 jobs in October, versus a September gain of 223,000. Economists polled by The Wall Street Journal, anticipating storm and strike effects, expected a gain of 100,000.
The unemployment rate stayed steady at 4.1%, in line with economists’ expectations.
Stocks were up in morning trading. Treasury yields fell in early trading but not too substantially, suggesting traders remained fairly optimistic about the economic outlook.
The noise in Friday’s report makes it difficult to interpret. The red-hot labor market was already starting to soften this summer. Then, the September report released a month ago blew past expectations. Economists are now trying to figure out which is the one-off and which is the trend.
Hurricanes Helene and Milton put thousands of people out of work across the Southeast, while the Boeing strike took more people off the job. The sharp drop in growth could indicate that disruptions played a much larger role than anticipated. Still, the downturn is likely temporary, and didn’t impact the larger dynamics of the market. Unemployment remained low and wages continued to rise.
The optics of the report give former President Donald Trump an additional talking point going into the final weekend of campaigning. But Vice President Kamala Harris can point to the still-low unemployment rate and the fact that the economy has added about 2.2 million jobs over the past year.
“This jobs report is a catastrophe and definitively reveals how badly Kamala Harris broke our economy,” the Trump campaign said.
The jobs figures for August and September were revised lower.
Economist Brian Bethune of Boston College estimates that without the effects of the fall hurricanes, the Boeing strike and further adjustments, the October job-creation figure would have been 130,000, instead of the 12,000 the government reported.
For its jobs figures, the Labor Department surveys U.S. employers on how many people they had on their payrolls during the pay period that includes the 12th of the month. Helene made landfall in Florida on Sept. 26, so it didn’t affect the September jobs report. Milton made landfall two weeks later.
The unemployment rate is based on a separate survey of households. Respondents who say they had jobs but weren’t at work because of bad weather are still counted as employed. The same goes for workers with jobs who are on strike.
The Labor Department said that it was likely that the job figures in some industries were affected by the hurricanes, but that it wasn’t possible to quantify the effect. The survey those numbers are based on “is not designed to isolate effects from extreme weather events,” the agency said.
But, it added, there “was no discernible effect on the national unemployment rate.”
Average hourly earnings were up 4% from a year earlier, which compared with 3.9% in September. Average earnings can get boosted by storms: Lower-paid workers are more likely to lose their jobs, pushing up the average.
The leisure and hospitality sector shed 4,000 jobs, which compares with an average monthly gain of 20,000 jobs for the first nine months of the year. The construction sector added 8,000 jobs, which also compared with an average gain of 20,000 jobs over the previous nine months.
The Boeing strike began in mid-September. The Labor Department’s monthly report on strike activity, released last week, said that there were 33,000 Boeing workers on strike for the entire pay period that included Oct. 12. Friday’s report showed a loss of 46,000 manufacturing jobs, driven by a decline of 44,000 jobs in transportation equipment manufacturing that the Labor Department said “was largely due to strike activity.”
The report is also the last major piece of economic data that Federal Reserve policymakers will see before they meet right after the election next week. They have signaled that they expect to lower their benchmark interest-rate target range by a quarter-point. Friday’s report is unlikely to persuade them to do a larger cut.
Still, with the data likely to show continued volatility from storms and strikes, the central bank’s challenge in the months ahead will be to tease out how well the labor market is doing. Some job losses from Milton might not show up until the November jobs report comes out next month, for example, while people who go back to work after temporarily losing their jobs could push the numbers the other way.
The good news is that to some degree the hurricane’s effects have already dissipated. Initial claims for unemployment insurance moved notably higher in early October, for example. But on Thursday, the Labor Department reported that last week they slipped to their lowest level since the spring.
Meanwhile, the economy has continued to grow solidly. The Commerce Department reported Wednesday that gross domestic product grew at an inflation-adjusted 2.8% annual rate in the third quarter.
Even though the economy and the labor market appear poised to keep buttressing one another, there are limits to how many jobs the U.S. can sustainably add, said Joe Brusuelas, chief economist at RSM US. Immigration added to the pool of available workers for much of this year. But with the number of people entering the U.S. down sharply since the spring, that supply has been curtailed.
Meanwhile, with the share of Americans ages 25 to 54 who are employed near its highest level in a quarter-century, finding qualified workers is no easy chore for companies looking to hire.
That all suggests to Brusuelas that the economy might only need to gain somewhere between 100,000 and 150,000 jobs each month to keep the unemployment rate steady.
“With the economy continuing to outperform and with the labor supply diminished, there is a real risk the unemployment rate will go down, not up,” he said.
Matt Grossman contributed to this article.
Write to Justin Lahart at Justin.Lahart@wsj.com
Courtesy of Yahoo News
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