After months of consistent employment growth, October marked the worst month for job seekers and employers this year, reflecting the effects of two major hurricanes and labor strikes.
The U.S. added 12,000 jobs in October and the unemployment rate held steady at 4.1%. The report by the Bureau of Labor Statistics came days before the presidential election and the Federal Reserve’s meeting, underscoring a time of uncertainty.
Marking the worst jobs report since December 2020, the data fell far short of economists’ expectations for the month, as they anticipated 120,000 jobs would be added in October, despite acknowledging that the hurricanes and strikes could distort the labor market. Before October, an average of 200,000 jobs were created each month throughout the year.
“It is likely that payroll employment estimates in some industries were affected by the hurricanes; however, it is not possible to quantify the net effect on the over-the-month change in national employment, hours, or earnings estimates because the establishment survey is not designed to isolate effects from extreme weather events,” the report said. “There was no discernible effect on the national unemployment rate from the household survey.”
The household survey, which tracks labor force status and unemployment by demographic characteristics, showed weak results. About 368,000 fewer people reported being employed, with the labor force shrinking by 220,000. Full-time positions dropped by 164,000, and part-time jobs decreased by 227,000. Manufacturing employment reported significant losses, exacerbated by the strike at Boeing Co., with 46,000 jobs lost in October.
Most of the jobs added last month were in government and healthcare — 52,000 and 40,000 added, respectively. Employment in leisure and hospitality — a sector typically characterized by strong job opportunities — declined by 4,000. Meanwhile, jobs in temporary help services fell by 49,000, with BLS reporting a total decline of 577,000 since March 2022.
The report arrived just days before the Federal Reserve’s meeting, where the committee lowered the interest rate by a quarter-point, bringing it down between 4.5% and 4.75%. Prior to the rate cut, former Federal Reserve Vice Chairman Roger Ferguson told CNBC that the committee should take the jobs report into account during its meeting, adding that “the underlying economy is certainly stronger than that kind of labor market would suggest.”
Even as inflation cools, there is hope that more cuts are on the horizon, as higher interest rates could harm the labor market and disrupt the economy’s current growth momentum.
While it’s uncertain whether the Fed will make another rate cut at its final meeting of the year in December, or if future decisions will rely on the outcome of the election, Ferguson noted that much of the committee’s decisions rely on incoming economic data, and some decisions have likely already been made.
“This time and maybe next time, depending on how the data plays out, it’s just carrying out a plan that had already been put in place,” he said. “I’d say the vast majority of people take it at face value – being consistent with inflation coming down and the desire to get back to that elusive thing known as neutral.”
