Hiring slowed sharply in final month before election amid hurricanes, strikes
The economy picked up just 12,000 jobs in October, the slowest pace since December 2020, as a labor market cooldown was exacerbated by major hurricanes and labor strikes in the final jobs report before the presidential election.
The unemployment rate held at 4.1 percent, which remains at a historically low level, though higher than in recent years.
Job gains in August and September were revised downward by 112,000, reflecting that the labor market was softer in the late summer than previously reported.
The job gains landed significantly below forecasters’ predictions, though it remains unclear how much of the pressure came from strikes and hurricanes rather than labor market weaknesses. The October job growth came in far lower than the average monthly gain of 194,000 over the past year. Economists say the disruptions could have artificially deflated employment gains by at least 100,000 jobs.
“October’s jobs report paints a picture of growing fragility in the U.S. labor market, but under the surface is a muddy report roiled by climate and labor disruptions,” Cory Stahle, an economist at the jobs site Indeed, wrote in an emailed note. “Other economic data shows that the labor market remains relatively solid.”
The labor market has become a key issue in the presidential election, with Republicans using recent jobs data as political ammunition. The Trump campaign declared Friday’s job gains a “catastrophe,” adding that the report “definitively reveals how badly Kamala Harris broke our economy,” Trump spokeswoman Karoline Leavitt said in a statement.
Last month, Sen. Marco Rubio (R-Florida) called the jobs report “fake” without evidence. Allies of former president Donald Trump have been accusing the Biden administration of manipulating jobs data for political gain, while President Joe Biden has defended his record.
The report also arrives before a Federal Reserve meeting, where policymakers will decide how much to lower interest rates. Economists say that report is consistent with a cut of a quarter of a percentage point.
Financial markets reacted with cautious enthusiasm to October’s job gains, as investors processed the noisy report, with all three major indexes trending up Friday morning. The tech-heavy Nasdaq jumped by 1 percent, while the S&P 500 rose by 0.7 percent.
This fall, the labor market weathered unusually large disruptions. A Boeing strike that began in September has rocked the Pacific Northwest, pulling some 33,000 workers onto the sidelines as well as a smaller number of aerospace workers laid off by downstream suppliers. Also punctuating last month’s payroll gains were Hurricanes Helene and Milton, which shuttered businesses and temporarily displaced tens of thousands of workers. However, Labor Department officials said in the report they couldn’t quantify the overall impact of the hurricanes.
Wage growth in October was robust, growing by 0.4 percent over the month. Average hourly earnings have risen by 4 percent this year, to $35.46 an hour, outpacing the rate of inflation and boosting workers’ pocketbooks.
Economists expected strong wage growth because low-wage workers, especially in construction and restaurants, were temporarily pulled out of the labor market by the hurricanes.
Most job gains were concentrated in just two service-related sectors. Health care added 52,000 jobs in October, reflecting strong demand from an aging baby boomer population. Public sector payrolls added 40,000, with strong gains in state government, a sector that has been catching up from years of losses and slower growth.
Meanwhile, manufacturing employment fell by 46,000, reflecting the Boeing strike. And employment levels in temporary help services dropped by 49,000. Sharp employment drops in the temporary help sector are often seen as a bellwether for economic downturns, because employers shed these workers first.
Employers in other major industries, including trade, retail, transportation and warehousing, information, financial activities, and leisure and hospitality showed little or no change in October.
Beneath all the noise, the labor market appears to have downshifted into a healthy but moderated pace of job growth in response to higher interest rates. Weekly jobless claims fell to a five-month low last week, according to Labor Department data released Thursday.
The payroll processing firm ADP reported this week that employers added 233,000 jobs in the private sector in October, the biggest gain since July 2023. Those numbers are often out of sync with Labor Department data.
Solid consumer spending is fueling the economy, which expanded in the third quarter, according to the U.S. gross domestic product report released Wednesday.
Jobs openings and hiring data depict a labor market that has cooled substantially from earlier in the pandemic era, which was defined by labor shortages that allowed workers to negotiate with employers for higher wages and switch into better-paying jobs.
“The demand for workers has weakened,” said Sarah House, senior economist at Wells Fargo. “It’s more difficult for new workers to find employment.”
The Federal Reserve began lowering interest rates in September and is expected to do so again at the end of its meetings after the election. That is expected to breathe more life into businesses that have been cautious to expand or hire new workers.