Evelyn Reynolds

Nonfarm payrolls increased by 12,000 for the month, down sharply from September and below the Dow Jones estimate for 100,000.
The unemployment rate held at 4.1%, in line with expectations.
The BLS noted that the Boeing strike likely subtracted 44,000 jobs in the manufacturing sector, while hurricanes also likely held back the total.
Revisions lowered previously reported job creation totals by 112,000 for August and September combined.

Job creation in October slowed to its weakest pace since late 2020 as the impacts of storms in the Southeast and a significant labor impasse dented the employment picture.
Nonfarm payrolls increased by 12,000 for the month, down sharply from September and below the Dow Jones estimate for 100,000, the Bureau of Labor Statistics reported Friday. In what had already been expected to be a downbeat report, October posted the smallest gain since December 2020.

The unemployment rate, however, held at 4.1%, in line with expectations. A broader measure of unemployment that includes discouraged workers and those holding part-time jobs for economic reasons also was unchanged at 7.7%.
In the report narrative, the BLS noted that the Boeing strike likely subtracted 44,000 jobs in the manufacturing sector, which lost 46,000 positions overall.

Along with that, the report noted the impact of hurricanes Helene and Milton but said “it is not possible to quantify the net effect” of the storms on the jobs total.
Elsewhere, the bureau said average hourly earnings increased 0.4% for the month, slightly higher than the estimate, though the 4% 12-month gain was in line. The average work week held steady at 34.3 hours.
Markets, though, largely ignored the bad news, with stock market futures poised for a strong open on Wall Street while Treasury yields plunged. The meager jobs numbers along with wages about in line with expectations help cement another interest rate cut from the Federal Reserve next week.

“At first glance, October’s jobs report paints a picture of growing fragility in the U.S. labor market, but under the surface is a muddy report roiled by climate and labor disruptions,” said Cory Stahle, an economist at the Indeed Hiring Lab. “While the impacts of these events are real and should not be ignored, they are likely temporary and not a signal of a collapsing job market.”

The release comes just days ahead of the presidential election in which Democrat Kamala Harris and Republican Donald Trump are in what most polls show to be a deadlocked race. With the economy at the forefront of the battle, the light jobs number “casts a murky shadow heading into next week,” said Lisa Sturtevant, chief economist at Bright MLS.
The weak October report also included substantial downward revisions from previous months. August was cut to just a gain of 78,000 while September’s initial estimate came down to 223,000. Together, the net revisions lowered previously reported job creation totals by 112,000.

Health care and government again led job creation, respectively adding 52,000 and 40,000 positions. Several sectors, though, saw job losses.
In addition to the expected pullback in manufacturing, temporary help services saw a drop of 49,000. The category is sometimes seen as a proxy for underlying job strength and has seen a decline of 577,000 since March 2022, the BLS said.
Another leading sector, leisure and hospitality, saw a drop of 4,000, while retail trade and transportation and warehousing also reported modest declines.
In the household survey, which is used to calculate the unemployment rate, the hiring numbers were even weaker.
That showed 368,000 fewer people reported holding jobs and the labor force contracting by 220,000. Full-time employment declined by 164,000, while part-timers fell by 227,000.
The report covers a month in which hurricanes Helene and Milton slammed the Southeast – Florida and North Carolina in particular – while the Boeing strike also hit what had been a vibrant though slowing labor market. Recent developments indicate that the Boeing impasse could be near an end.
Prior to the release, job creation had averaged close to 200,000 a month during 2024, about 60,000 below the pace for the same period a year ago through still indicative of solid pace of hiring.
Some cracks in recent months have raised concerns at the Federal Reserve that while the year-over-year pace of inflation is slowing, elevated interest rate could impact the labor market and threaten the ongoing economic expansion.
As a result, policymakers in September took a step unprecedented for a growing economy and lowered their benchmark short-term interest rate by half a percentage point, double the customary quarter-point increments in which the Fed usually likes to move.
Financial markets are pricing in a strong likelihood that the central bank cuts by a quarter point at each of its two remaining meetings this year. The rate-setting Federal Open Market Committee will announce its decision next Thursday. More

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