U.S. payrolls slumped sharply in October, weighed down by people not working as a result of two hurricanes and major labor disputes.
The U.S. added just 12,000 in October, well below economists’ estimate of 100,000, marking the slowest month for hiring since December 2020.
Unemployment held steady at 4.1%. The lackluster report reflects a dent in hiring attributed to Hurricanes Milton and Helene, and the Boeing machinists strike, which temporarily prevented some people from working in Florida and North Carolina. The union representing the machinists late Thursday expressed support for the company’s latest contract offer, which could end the weekslong strike if Boeing workers ratify it.
It’s the last jobs report to be released before Election Day Tuesday. Economists say this month’s report is less informative than others due to noise caused by the storms and two major strikes.
“These jobs will likely rebound quickly and add to job growth numbers in coming months,” Economic Policy Institute chief economist Josh Bivens wrote in a research note.
Analysts underlined the distorted nature of the report, and cautioned that it doesn’t accurately reflect the strength of the current job market.
“The pace of job creation was skewed by the devastating effects of Hurricane Milton and Helene, then distorted further by obstacles presented by major employee strikes where manufacturing took a hit,” Eric Roberts, CEO USA of Fiera Capital said in an email. “The extent of both has yet to be fully reflected in the economy with potential shock waves over the next few months. These events make it more difficult to obtain an accurate snapshot of labor market data ahead of the election next week.”
With inflation having significantly cooled, the Federal Reserve is set to cut its benchmark interest rate next week for a second time and likely again in December. The Fed’s 11 rate hikes in 2022 and 2023 tamped down inflation without tipping the economy into a recession. A series of Fed rate cuts should lead, over time, to lower borrowing rates for consumers and businesses.
Although the economy hasn’t buckled as the Fed tightened monetary policy, the job market has slowed. The Labor Department this week reported that employers posted 7.4 million job openings in September. Though that is still more than employers posted on just before the 2020 pandemic, it amounted to the fewest openings since January 2021.