In the wake of two massive hurricanes and a strike at a major manufacturer, new job creation stalled in October as employers added just 12,000 new positions overall, the Labor Department reported Friday. The unemployment rate held steady at 4.1%.
The growth in nonfarm payrolls was well below expectations of about 100,000, though the pre-report projections were all over the map as analysts tried to guess just how distorted the October report would be by weather and labor strife.
The strike at Boeing appears to have weighed on manufacturing employment, which fell by 46,000. The government did not provide an estimate of the jobs lost due to the hurricanes, saying their survey “is not designed to isolate effects from extreme weather events.” But some analysts estimated that the net effect of the storms was a job loss of roughly 100,000.
Still, although most analysts are viewing the report as an outlier that does not signal the beginning of a sharp slowdown, there are signs that the labor market is cooling off. Job growth in July and Augst was revised lower by a combined 112,000, suggesting that the labor market wasn’t quite as hot this summer as previously believed.
“The big one-off shocks that struck the economy in October make it impossible to know whether the job market was changing direction in the month,’’ Bill Adams, chief economist at Comerica Bank, said in a note, per the Associated Press. “But the downward revisions to job growth through September show it was cooling before these shocks struck.’’
Saying the report should be taken “seriously but not literally,” Joseph Brusuelas, chief economist at RSM, offered a similar though perhaps more upbeat assessment. “The October jobs report was full of noise and hurricane-induced distortions that do not reflect the fundamental strength of the American labor market,” he wrote. “We think that hiring has slowed to a monthly pace of near 120,000, which is sustainable for an economy at full employment and growing at a 2.7% rate over the past 12 months.”
The messaging battle: The Trump campaign jumped on the news as it sought to gain political advantage from the disappointing numbers. “This jobs report is a catastrophe and definitively reveals how badly Kamala Harris broke our economy,” the campaign said in a statement.
On the campaign trail, former President Donald Trump blamed Harris for what he called the “worst jobs report in the history of our country.” But he also welcomed the news, saying it was good for him in some ways. “Our economy is a total disaster and is expected to get very substantially worse,” he said. “It’s a wonderful time for me coming in, you know — this is what I want. Now, I would rather come in when things are going in the right direction, but we’re going to get it straightened out fast.”
President Joe Biden highlighted that fact that the weather-related job losses were expected to be temporary and would likely be reversed during the extensive rebuilding effort. He also noted that striking workers at Boeing will soon vote on a new contract, and called on Americans to look at the big picture. “America’s economy remains strong, with 16 million jobs created since I took office, including an average 180,000 jobs created each month over the last year—more than the year before the pandemic,” he said. “We have the lowest average unemployment rate of any administration in 50 years, our economy has grown more than any presidential term this century, incomes are up $4,000 over prices, and inflation has fallen nearly to its 2% target.”
The bottom line: The presidential candidates and their surrogates will battle over the meaning of the weak October jobs report, but most analysts say it should be taken with a large grain of salt, if not set aside entirely due to one-time distortions. Although it seems clear that the labor market is cooling, the long-term trend suggests that the economy is still chugging along as we head into Election Day.
