According to data from the U.S. Bureau of Labor Statistics, job growth in the U.S. significantly slowed in October due to the impact of hurricanes and strikes by aircraft factory workers. The unemployment rate, however, remained steady at 4.1%, indicating a resilient labor market despite upcoming elections.
Nonfarm payrolls increased by 12,000 in October, a substantial decrease from September's revised 223,000. Economists had expected an increase of 113,000 jobs, with estimates ranging from no growth to an addition of 200,000 positions.
Hurricanes Helene and Milton affected the Southeast and Florida, resulting in 41,400 workers participating in strikes, including machinists from Boeing (BA, Financial) and Textron, as well as 3,400 workers from three hotel chains in California and Hawaii.
Workers who did not receive wages during the survey period were counted as unemployed in the establishment survey used to calculate payroll numbers. However, since striking workers are considered employed in the household survey, the unemployment rate remained unaffected. Those unable to work due to adverse weather were reported as having jobs but not at work, in line with the BLS classification.
Economists expect the Federal Reserve to cut interest rates by 25 basis points in the upcoming meeting, driven partly by the rise in unemployment from 3.8% in March to 4.3% in July, which prompted an unusual half-percentage-point rate cut in September. This was the first reduction in borrowing costs since 2020. The federal funds rate is currently set between 4.75% and 5.00%, following a total increase of 525 basis points in 2022 and 2023.
Despite a slowdown in hiring, employers have retained workers, supporting wage growth and consumer spending. Average hourly earnings grew by 0.4% in October, following a 0.3% increase in September. Wages rose by 4.0% over the 12 months ending in October, compared to a 3.9% increase in September.
