Uninformative Jobs Report
The US economy added only 12,000 jobs in October vs. the 100,000 estimate and the 194,000 12-month trailing average. This discrepancy largely illustrates the effects of hurricanes Helene and Milton and the ongoing strike at Boeing. Although the Bureau of Labor Statistics (BLS) cannot estimate the impact of the hurricanes on this month's figures due to data limitations and survey disruptions, it does calculate a 44,000 job impact from labor strikes.
The government added 40,000 jobs in October, in line with the 43,000 12-month trailing average. Of the 28,000 jobs lost in the private sector, healthcare added 51,300, durable goods lost 47,000 (as affected by the Boeing strike), and temporary help service jobs declined by 48,500.
The unemployment rate reached 4.1%, unchanged from September and higher than the 3.8% reading one year ago. Furthermore, The labor participation rate stood at 62.6%, vs. 62.7% the previous month and October 2023.
On a more positive note, average hourly earnings for private-sector employees increased by $0.13 or 0.4% MoM (+4.0% YoY) to $35.46, a steady wage growth despite the sluggish job creation.
Why You Should Care
The jobs report fails to clarify the job market conditions as the Federal Open Market Committee (FOMC) meets to define monetary policy this week. The Sahm Rule* being triggered a couple of months ago initially led several economists to suggest the Fed was behind the curve in lowering interest rates. This led to it beginning the cutting cycle with a 50bp cut in the Federal Funds Rate in September. The November reading next month might prove more consequential as Boeing could reach an agreement with workers and the effects of hurricanes Helene and Milton begin to dissipate.
*Triggered when the three-month average of the national unemployment rate rises by 0.5 percentage points or more above its lowest point in the previous 12 months. This increase is considered an early warning of an economic downturn because it indicates significant labor market weakening, often preceding broader economic declines.
You may read the full jobs report here.