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Only 12,000 jobs were added in October, a very low number that is mostly attributable to two hurricanes in the Southeast and the continuing strike by Boeing machinists. The strike at Boeing has idled 33,000 machinists plus roughly 8,000 other workers in the company’s supply chain. It is difficult to know how the employment survey was affected by Hurricanes Helene and Milton in Florida, Georgia and North Carolina. 512,000 people were unable to work because of weather, but most of them were counted in the report as still employed. Those who would have been counted as not being employed would have been primarily in the construction, retail, and leisure and hospitality industries, which saw minimal job growth or declines. The larger-than-usual 48,500 drop in temporary help is likely due to both the strike and the hurricanes. Economists have guessed that the report would have shown 50,000 to 100,000 more jobs without the effects of the hurricanes. But the response rate to the October survey was very low, at less than 50%, so there may be substantial revisions to the October data in the next two months.
Outside of the hurricanes and strikes, the labor market appeared to be on a modest softening trend in October. Job growth in August and September was revised down, primarily because of a technical revision to seasonal adjustment patterns. Job opening rates continued to decline. The unemployment rate was unchanged at 4.1%, but it would have ticked up if the size of the labor force had not declined. Wage growth, as reported in the employment cost index through September, was 3.9% over the previous 12 months, but it has been on an easing trend. In October, growth in average hourly earnings picked up a bit to 4.0%, but again, hours worked could have been depressed by the hurricanes, which would boost per-hour earnings, since many employees are salaried and receive the same amount of pay each month.
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A return to more-typical levels of hiring in the labor market is still imminent, with future monthly gains likely to be in the 150,000 range. Eventually, food service and government will make up for the labor shortages they experienced during the pandemic. Also, the goods-producing sector is still showing weakness. There were job losses in manufacturing, transportation and warehousing, and temporary employment. Temp jobs continued the downtrend that has been in place for more than two years now. These jobs are often in the manufacturing sector and tend to be cut first when demand for manufactured goods softens.
Despite the uncertainty of the hurricane impact, the Federal Reserve will likely also see a moderating trend in the jobs report. As a result, expect the Fed to continue with its rate-cutting plans at its next policy meeting on November 7, when it will reduce short-term interest rates by a quarter-point.
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