Evelyn Reynolds

Economists surveyed by Dow Jones expect the Bureau of Labor Statistics to report Friday that payrolls expanded by just 100,000 on the month, the lowest in nearly four years.
Whatever the results, markets may choose to look through the report, as multiple one-time hits including strikes and storms dampened hiring.
Indicators leading up to the much-watched jobs report show that hiring has continued apace and layoffs are low.

Hiring signs outside a Stewart’s gas station in Catskill, New York, US, on Wednesday, Oct. 2, 2024. 
Angus Mordant | Bloomberg | Getty Images

Powerful hurricanes and a major labor strike could take a chunk out of the nonfarm payrolls count for October, which is expected to be the slowest month for job creation in nearly four years.
Economists surveyed by Dow Jones expect the Bureau of Labor Statistics to report Friday that payrolls expanded by just 100,000 on the month, held back by hurricanes Helene and Milton as well as the strike at Boeing. If their prediction is accurate, it would be the lowest job total since December 2020 and a huge drop from September’s 254,000.

The report, which will be released at 8:30 a.m. ET, is also expected, however, to indicate that the unemployment rate will be unchanged at 4.1%.

“When we look through that [headline jobs number], the unemployment rate will remain low, and I think wages will grow faster than inflation, and both those things are going to underscore the health of the U.S. economy,” said Michael Arone, chief investment strategist at State Street Global Advisors.
On wages, average hourly earnings are projected to rise 0.3% for the month and 4% from a year ago, the annual figure being the same as September and furthering the narrative that inflation is sticky but not accelerating.

Whatever the results, markets may choose to look through the report, as so many one-time hits dampened hiring.
“The top-line numbers will be a little bit noisy, but I think there’ll be enough there to continue to determine that the soft landing is intact and that the U.S. economy remains in good shape,” Arone added.

The hurricanes caused what could be historic levels of monetary damage, while the Boeing strike has sidelined 33,000 workers.
Goldman Sachs estimates that Helene shaved as much as 50,000 off the payrolls count, though Hurricane Milton probably happened too late to affect the October count. The Boeing strike, meanwhile, could lower the total by 41,000, added Goldman, which is forecasting total payrolls growth of 95,000.

Data has been solid

Yet indicators leading up to the much-watched jobs report show that hiring has continued apace and layoffs are low, despite the damage done from the storms and the strikes.
Payrolls processing firm ADP reported this week that private companies hired 233,000 new workers in October, well above the forecast, while initial jobless claims fell to 216,000, equaling the lowest level since late April.
Still, the White House is estimating that the events cumulatively may hit the payrolls count by as many as 100,000. The “disruptions will make interpreting this month’s jobs report harder than usual,” Jared Bernstein, chair of the Council of Economic Advisers, said Wednesday.
Jobs numbers in general have been noisy in the post-Covid era.

Earlier this year, the BLS announced benchmark revisions that knocked off 818,000 from previous counts in the 12-month period through March 2024. Year to date through July, revisions have taken a net 310,000 off the initial estimates.
“This report will reinforce the big picture, which is that the labor market is still growing. But the fact is that it’s growing but slowing,” said Julia Pollak, chief economist at ZipRecruiter. “Growth is slowing and also becoming more narrowly concentrated in just a couple of sectors.”
Leading areas of job creation this year have been government, health care, and leisure and hospitality. Pollak said that continues to be the case, particularly for health care, while ZipRecruiter also has seen more interest in skilled trades along with finance and related businesses such as insurance.
However, she said the general picture is of a slowing market that will need some help from Federal Reserve interest rate cuts to stop the slide.
“For the last two quarters now, job growth has been below the pre-pandemic average, and job gains have been unusually narrowly distributed,” Pollak said. “That has real effects on job seekers and workers who felt their leverage erode, and many of them are struggling to find sort of acceptable jobs. So I do think the Fed’s attention should be firmly on the labor market.” More

The personal consumption expenditures price index showed a seasonally adjusted 0.2% increase for the month, with the 12-month inflation rate at 2.1%, both in line with Dow Jones estimates.
However, the core inflation rate was at 2.7% after the measure increased 0.3% on a monthly basis.
Initial filings for unemployment benefits totaled 216,000 for the week ending Oct. 26, a decrease of 12,000 and below the forecast for 230,000.

Inflation increased slightly in September and moved closer to the Federal Reserve’s target, according to a Commerce Department report Thursday.
The personal consumption expenditures price index showed a seasonally adjusted 0.2% increase for the month, with the 12-month inflation rate at 2.1%, both in line with Dow Jones estimates. The Fed uses the PCE reading as its primary inflation gauge, though policymakers also follow a variety of other indicators.

Fed officials target inflation at a 2% annual rate, a level it has not achieved since February 2021. The September headline rate was down 0.2 percentage point from August.
Though the headline number showed the central bank nearing its goal, the inflation rate was at 2.7% excluding food and energy, after the so-called core measure increased 0.3% on a monthly basis. The annual rate was 0.1 percentage point higher than forecast but the same as in August.
The move in inflation was tilted towards services prices, which increased 0.3%, while goods prices decreased 0.1%, the fourth outright deflation figure in the past five months for the category. Housing prices eased off their pace, rising 0.3%. Energy goods and services fell 2%.
The report comes with markets betting heavily that the Fed will cut its benchmark short-term borrowing rate when it meets next week. In September, the Fed slashed the rate by a half percentage point, a move virtually unprecedented during an economic expansion.
Policymakers have expressed confidence that inflation is heading back to target while at the same time showing concern over the state of the labor market despite most indicators showing that hiring is continuing and layoffs are low.

A separate report Thursday morning reinforced the notion that companies are mostly hanging onto their workers.
Initial filings for unemployment benefits totaled 216,000 for the week ending Oct. 26, a decrease of 12,000 from the previous period’s upwardly revised level, according to the Labor Department. The total was also below the 230,000 forecast.
Despite worries over inflation, the Commerce Department report showed income and spending held up during the month.
Personal income increased 0.3%, slightly higher than the August number and in line with expectations. Consumer spending rose 0.5%, topping the outlook by 0.1 percentage point. The personal saving rate moved down to 4.6%, its lowest of the year.
In yet another data point Thursday, the Bureau of Labor Statistics reported that the employment cost index increased 0.8% in the third quarter, 0.1 percentage below forecast. On a 12-month basis, the index, which measures wages, salaries and benefits, increased 3.9%, compared to a 2.4% increase in the consumer price index. More

Inflation in the euro area rose from 1.7% to 2% in October, flash figures showed Thursday, coming in slightly higher than the 1.9% forecast.
Core inflation and services inflation were both unchanged on the previous month.
Markets currently expect the European Central Bank to cut interest rates by another 25 basis points in December, with one analyst saying the latest data would end debate over whether a larger 50-basis-point cut is warranted.

Line-up of pumpkins in the Netherlands, on Oct. 27, 2024.
Nurphoto | Nurphoto | Getty Images

Inflation in the 20-nation euro zone rose to 2% in October, preliminary figures released by statistics agency Eurostat showed Thursday.
Economists polled by Reuters had forecast a headline figure of 1.9%. The September headline reading was revised down to 1.7% from 1.8% on Oct. 17, below market expectations.

The biggest upward pull in the headline rate came from food, alcohol and tobacco, where price rises accelerated to 2.9% from 2.4%.
Core inflation, which excludes those volatile components along with energy prices, was unchanged at 2.7%, slightly higher than the 2.6% expected. Services inflation — an important gauge of domestic price pressures — also held steady at 3.9%.

The euro was up 0.15% against the U.S. dollar following the release, trading at a two-week high of $1.087.
The fresh Thursday inflation print was seen as crucial in judging whether the European Central Bank could consider implementing a jumbo half-percentage-point cut in interest rates at its next meeting in December.
The central bank has so far trimmed rates three times this year, in quarter-point increments that altogether took the central bank’s key rate from 4% to 3.25%.

Markets are currently pricing another 25-basis-point reduction in December.

Euro zone growth

Traders are also considering the latest growth figures for the euro area, which showed better-than-expected 0.4% expansion in the third quarter, even as analysts predicted further weakness ahead.
The ECB said during its October meeting that the process of disinflation was “well on track” and that sluggishness in the euro zone’s economic activity had added to its confidence that inflation will not resurge dramatically.
“Hotter eurozone inflation, stronger growth and record low unemployment wipe out bets for a 50 [basis point] cut,” Kyle Chapman, foreign exchange market analyst at Ballinger Group, said in a note.
Chapman said that, while an uptick in consumer price growth was expected toward the end of the year, services inflation remained sticky.
“A big concern underpinning the risks of inflation undershooting the target was a potential tipping point with the labor market, the surprising resilience of which could be at risk of a sharp unwind in labor hoarding if consumption worsens. That concern is no longer so significant,” Chapman stressed, pointing to this week’s growth and employment figures.
“Back-to-back 25 [basis point] moves are the way to go. The need for below-neutral rates to rescue a contracting eurozone economy is fading from the discussion, and that negates the need to hurry the easing cycle, particularly with services inflation struggling to come unstuck.” More

“I think globally, the serious, serious issue that we need to watch is sovereign debt,” Mohammed Al-Jadaan told CNBC in Riyadh.
Global public debt hit a record $97 trillion in 2023, prompting the United Nations to call for urgent reforms for governments and financial systems around the world.

RIYADH — National debt is a major threat to markets in the near future, Saudi Arabia’s finance minister said, expressing particular concern over lower income countries as well as what he described as rapidly growing global fragmentation.
“I think globally, the serious, serious issue that we need to watch is sovereign debt issues, particularly in low-income countries and emerging economies that do not have the fiscal buffers to lean into in case of disruptions in the market,” Mohammed Al-Jadaan told CNBC’s Dan Murphy Wednesday from the Future Investment Initiative in Riyadh.

“And hopefully between the IMF and the G20 we will find a solution, and we will be ready to support the world economy in case of shocks in that area, but it is an area that we need to watch, as global leaders, to make sure that it doesn’t surprise us.”
Al-Jadaan earlier in the conversation noted the importance of reaching a soft landing for economies as central banks attempt to manage inflation.
“We came from Washington two days ago, after a week full of meetings at IMF and the World Bank and the G20, and I think a there is a clear recognition that the world is actually proving to be resilient,” he said. “And a lot of discussion around steering the soft landing, which is very important. The key challenge is actually sovereign debt, and a lot of discussion throughout last week is to make sure that the three institutions work together to try and find a solution to the sovereign debt, particularly in low-income countries.”
Global public debt hit a record $97 trillion in 2023, prompting the United Nations to call for urgent reforms for governments and financial systems around the world.

Saudi Finance Minister Mohammed al-Jadaan attends a panel panel at the annual Future Investment Initiative (FII) conference in Riyadh on October 25, 2023. (Photo by Fayez Nureldine / AFP) (Photo by FAYEZ NURELDINE/AFP via Getty Images)
Fayez Nureldine | Afp | Getty Images

Particularly in Africa, the UN wrote in a June report this year, “faltering economies in the wake of multiple global crises have resulted in a heavier debt burden.” The number of African countries with debt-to-GDP rations surpassing 60% has more than quadrupled from 6 to 27 between 2013 and 2023, the report said.

Paying back debt has also become more expensive, hitting emerging market and developing countries more intensely.
“I think the painful fact is that low-income countries, a lot of them, are now having today their debt service that is actually more [costly] than their health care, education and climate action combined,” Al-Jadaan said Wednesday.
“That is not good for the world, and we need to make sure that we find a solution to that. Hopefully we will, and we are working collectively global to reach that solution.” More