U.S. job growth experienced a sharp slowdown in October, adding only 12,000 jobs compared to a robust 223,000 in September, largely due to the disruptions caused by hurricanes and strikes. Despite this slowdown, the unemployment rate remained steady at 4.1%, indicating some resilience in the labor market.
These figures, released by the Labor Department, are particularly significant as they precede the upcoming presidential election on Tuesday, providing insight into the state of the economy as Americans head to the polls. While healthcare and government sectors continued to see job growth, manufacturing saw a decline, notably impacted by ongoing strikes.
Approximately 30,000 Boeing workers have been striking since September 13, contributing to a notable reduction in aircraft production. The manufacturing sector lost 46,000 jobs in October, primarily due to a decrease of 44,000 jobs in transportation equipment manufacturing linked to strike activity.
The 12,000 jobs added were far below the expectations of economists, who had predicted an increase of 113,000. It’s important to note that workers on strike were not counted in last month’s job figures, which impacted the overall payroll numbers. Brian Coulton, chief economist at Fitch Ratings, commented, “While the 12,000 increase appears weak, it follows a strong September and is influenced by strikes and hurricanes.”
Hurricanes Helene and Milton significantly affected the workforce, with 512,000 people reporting they could not work due to severe weather. Despite the unexpected slowdown, analysts believe the Federal Reserve will still cut interest rates by 0.25 percentage points next week. Seema Shah, chief global strategist at Principal Asset Management, stated, “The hurricane’s impact on these numbers has clouded the labor market picture and should not influence the Fed’s policy decisions.”
Lindsay Rosner from Goldman Sachs Asset Management echoed this sentiment, noting the challenges posed by the extreme weather. The Labor Department acknowledged that the survey does not effectively isolate the effects of such weather events, making it difficult to assess their full impact.
Over the past year, job growth has generally slowed, and while the unemployment rate has edged up, it remains at historically low levels. Average hourly earnings have seen a 4% increase over the past year. Recently, the Federal Reserve made a notable cut to interest rates, reducing them by 0.5 percentage points to help support the labor market and mitigate any further weakening.
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