Economy added 12,000 jobs, impacted by hurricanes, Boeing strike

October job creation fell to the weakest pace since late 2020 as the effects of storms in the Southeast and a significant labor backlog marred the employment picture.

Nonfarm payrolls rose 12,000 for the month, down sharply from September and below the Dow Jones estimate of 100,000, Bureau of Labor Statistics reported Friday. In what was already expected to be a downbeat report, October had the smallest gain since December 2020.

However, unemployment remained at 4.1%, which is in line with expectations. A broader measure of unemployment, which includes discouraged workers and those in part-time jobs for financial reasons, was also unchanged at 7.7%.

In the report’s narrative, the BLS noted that the Boeing strike likely cost 44,000 jobs in the manufacturing sector, which lost 46,000 positions overall.

Along with that, the report noted the impact of Hurricanes Helene and Milton, but said “it is not possible to quantify the net effect” of the storms on the total number of jobs.

Elsewhere, the bureau said average hourly earnings rose 0.4% for the month, slightly higher than the estimate, although the 4% 12-month gain was in line. The average working week remained stable at 34.3 hours.

However, markets largely ignored the bad news, with stock market futures poised for a strong opening on Wall Street while Treasury yields fell. The lackluster jobs numbers, along with wages in line with expectations, help cement another rate cut by the Federal Reserve next week.

“At first glance, October’s jobs report paints a picture of growing fragility in the US labor market, but beneath the surface is a muddy report marred by climate and labor disruptions,” said Cory Stahle, economist at the Indeed Hiring Lab. “While the effects of these events are real and should not be ignored, they are likely to be temporary and not a signal of a collapsing labor market.”

The release comes just days before the presidential election, in which Democrat Kamala Harris and Republican Donald Trump find themselves in what most polls show as a deadlocked race. With the economy at the forefront of the battle, the light jobs numbers “cast a murky shadow heading into next week,” said Lisa Sturtevant, chief economist at Bright MLS.

The weak October report also contained significant downward revisions from previous months. August was cut to just a gain of 78,000, while September’s original estimate came down to 223,000. Together, the net revisions lowered previously reported job creation by 112,000.

Health care and the government again led job creation, adding 52,000 and 40,000 positions respectively. However, several sectors experienced job losses.

In addition to the expected decline in production, temporary auxiliary services saw a decrease of 49,000. The category is sometimes seen as a proxy for underlying job strength and has seen a decline of 577,000 since March 2022, the BLS said.

Another leading sector, leisure and hospitality, saw a drop of 4,000, while retail and transport and warehousing also reported modest declines.

In the household survey, which is used to calculate the unemployment rate, employment figures were even weaker.

It showed that 368,000 fewer people reported having jobs and that the labor force fell by 220,000. Full-time employment fell by 164,000, while part-time employment fell by 227,000.

The report covers a month in which hurricanes Helene and Milton battered the Southeast — Florida and North Carolina in particular — while the Boeing strike also hit what had been a buoyant but slowing labor market. Recent developments suggest that the stalemate for Boeing may be coming to an end.

Before the release, job creation had averaged close to 200,000 a month in 2024, about 60,000 below the pace of the same period a year ago, though still indicating a solid hiring pace.

Some cracks in recent months have raised concerns at the Federal Reserve that even if the pace of inflation is slowing year-over-year, higher interest rates could affect the labor market and threaten the ongoing economic expansion.

As a result, in September policymakers took an unprecedented step for a growing economy, cutting their benchmark short-term interest rate by half a percentage point, double the usual quarter-point increases the Fed usually likes to move in.

Financial markets are pricing in a strong likelihood that the central bank will cut rates by a quarter of a point at each of its two remaining meetings this year. The rate-setting Federal Open Market Committee will announce its decision next Thursday.