October’s jobs report was significantly weaker than expected, thanks to distortions from two major hurricanes and labor strikes. Still, the data overall paints a picture of a softening labor market.
The United States added 12,000 jobs in October, according to data released Friday by the Bureau of Labor Statistics. That’s well below economist expectations of 120,000 jobs. The unemployment rate remained steady at 4.1%. The BLS said two hurricanes that hit the Southeast in October likely depressed job growth, as did strike activity in the manufacturing sector.
The data comes ahead of the US presidential election and the Federal Reserve’s November meeting next week. Bond futures markets anticipate a 0.25% interest-rate cut at that meeting, and analysts do not expect the abnormal jobs report to steer the central bank from that path.
“Today’s jobs report keeps the Fed on track to cut interest rates,” says Preston Caldwell, chief US economist at Morningstar. He points to signs of softness in the report that are evident despite the distortions, including downward revisions to jobs data from September and August. “It does seem mostly likely that accounting for all disruptions, October’s job growth was weaker than normal, but this is just a guess at this point,” he says. Adding it all up, “today’s jobs report was a bit bearish” for the economy.
Monthly Payroll Change
October Jobs Report Key Stats
- Total nonfarm payrolls grew by 12,000 versus a downward-revised 223,000 in September.
- The unemployment rate held steady at 4.1%.
- Average hourly wages grew by 0.4% to $35.46 after rising 0.3% in September.
Caldwell advises investors to take October’s data with a grain of salt. While he thinks the major strike at Boeing BA can be estimated to have cost 40,000-50,000 jobs, it’s more difficult to quantify the impact of the hurricanes. More clarity should come when state and local data is released in a few weeks. Caldwell adds that participation in the survey used to calculate job growth was also relatively low, meaning “the October data is liable to be greatly revised in the next two months.”
Unemployment Rate
Government and Healthcare Jobs Continue to Grow
According to the BLS, the healthcare industry added 52,000 in October, while the government sector added 40,000 new jobs. Meanwhile, the transportation equipment manufacturing sector lost 44,000 jobs, which the BLS said is mostly attributable to the Boeing strike.
Selected Payroll Categories
Hourly Earnings Continue to Rise
In October, average hourly wages increased by $0.13, or 0.4%, to $35.46. Over the past year, average hourly earnings have risen by 4%.
Monthly Wage Growth
Will the Fed Cut Rates in November?
Markets overwhelmingly expect the Fed to reduce interest rates by 0.25% next week, bringing the target federal-funds rate to a 4.50%-4.75% range. Bond market futures see a 99.8% chance of that outcome, according to the CME FedWatch Tool.
Federal-Funds Rate Target Expectations for November 7, 2024 Meeting
Caldwell says the recent trend in labor market data supports the Fed’s likely rate cut. “The data overall points to a job market that has shed all of its post-pandemic tightness and excesses, and suggests enough downside risk to warrant monetary easing,” he says. “There’s nothing to dissuade the Fed from cutting in next week’s meeting.”
He expects the central bank to continue loosening policy over the next year. Bond investors expect cuts totaling roughly 1.25% by the end of December 2025, according to the CME FedWatch tool.