In October, the U.S. economy saw the addition of only 12,000 new positions, marking the weakest jobs report during the Biden administration. This figure, reported by the Bureau of Labor Statistics just days before the U.S. election, was significantly impacted by hurricanes and a strike at Boeing.
Although the report was highlighted by the Trump campaign, the Biden administration maintained that underlying economic indicators, particularly the unemployment rate, remained robust. The Trump campaign criticized the report, attributing economic challenges to Vice-President and Democratic nominee Kamala Harris. President Joe Biden expressed optimism, anticipating job growth recovery in November as hurricane recovery and rebuilding efforts progressed.
The October employment report fell significantly below economists’ average forecast of 100,000 new jobs, as surveyed by Bloomberg, and was substantially less than the revised 223,000 new jobs in September. Despite this, the U.S. labor market showed resilience, with the unemployment rate holding steady at 4.1 percent.
Sarah House, a senior economist at Wells Fargo, noted the labor market’s struggle to stabilize due to the hurricanes and strike, coupled with weak employment figures from the preceding months. She highlighted that while the jobs market remains strong, it is no longer overheated.
The recent data reinforced expectations for a potential Federal Reserve rate cut of a quarter-point in the upcoming week. Following the report’s release, market analysts predicted a likely reduction in interest rates in December. Consequently, U.S. government bond yields dropped from recent highs, reflecting altered interest rate expectations.
U.S. stocks experienced gains, with the S&P 500 and the Nasdaq Composite index both rising over 1 percent. According to Mark Cabana, head of U.S. rates strategy at Bank of America, the report was anticipated to be weaker due to distortions from weather events and strikes, but the outcome was softer than forecasted, indicating a broader labor market softening.
The data for October was collected during a period when Hurricane Milton affected Florida, and Hurricane Helene impacted the southeastern U.S. Additionally, the ongoing Boeing strike, which involved 33,000 workers ceasing work, significantly affected the figures.
The Bureau of Labor Statistics acknowledged that the hurricanes influenced job growth but were unable to quantify the exact impact on employment changes, hours worked, or wage gains. They reported below-average survey responses for this jobs report.
Economists approximated a potential 40,000-job loss due to the hurricanes alone. Manufacturing employment decreased by 46,000, largely affecting the transportation equipment sector due to the strikes.
Construction, retail, leisure and hospitality, and financial sectors all showed minimal or no job growth, with private sector payrolls declining by 28,000 positions. Furthermore, August payroll figures were revised downwards by 81,000 to 78,000 net jobs, and combined with a downward revision for September, the U.S. economy produced 112,000 fewer jobs over two months than previously reported.
As inflation has declined recently, the Federal Reserve has prioritized safeguarding the labor market, attempting to achieve a “soft landing” where inflation stabilizes at the Fed’s 2 percent target without sparking a recession. David Kelly, chief global strategist at JPMorgan Asset Management, suggested that despite the October figures, such an outcome remains possible, noting the difficulties in calculation and the transient nature of the distortions caused by the strike and hurricanes.
