US Job Growth Slows Sharply in October Amid Hurricanes and Strikes

The U.S. labor market experienced a significant slowdown in October, with nonfarm payrolls adding just 12,000 jobs, far below the expected 106,000. This steep drop comes after September’s revised 223,000 job increase, as the Labor Department indicated that severe hurricanes in the Southeast and strikes in manufacturing weighed heavily on the report.

Key Highlights:

• Job Additions: Nonfarm payrolls grew by only 12,000, much lower than economists’ estimates of 106,000.
• Impact of Natural Disasters: The effects of Hurricanes Helene and Milton in the Southeast led to considerable regional economic disruptions, though the exact impact remains undetermined.
• Manufacturing Sector: Employment fell by 46,000, with 44,000 attributed to strikes. Notably, over 30,000 Boeing workers on the West Coast were on strike, though a new pay deal could signal an end to the labor action.

Unemployment and Wages

The unemployment rate remained at 4.1%, consistent with forecasts and September’s level, while average hourly earnings edged up by 0.4%, slightly above the revised 0.3% gain last month. This steady wage growth suggests a modest, ongoing demand for labor despite the temporary setbacks from natural disasters and strikes.

Resilience in Private Sector Data

Earlier this week, private payrolls and first-time unemployment claims showed more strength than anticipated, with unemployment claims falling to a five-month low. Combined with signs of easing inflation, these indicators bolster consumer spending—a core component of U.S. economic health.

Federal Reserve Outlook and Upcoming Presidential Election

The Fed is likely to continue with planned rate cuts in its upcoming meetings, after its recent 50-basis-point cut to the 4.75%-5% range, citing support for the labor market amid moderating inflation.

October’s job figures are among the final major economic data releases before the November 5 presidential election, a closely contested race with economic performance central to voter concerns. The latest GDP report showed the U.S. economy grew by 2.8% in Q3, down from 3.0% in Q2, primarily due to reduced inventory investments and a decline in residential investments. However, this dip was offset by strong exports and consumer spending, underscoring a largely resilient economy heading into election week.