Payam Javan: In a final labor market report before the presidential election, the U.S. economy showed a weaker-than-expected job growth of just 12,000 in October, falling significantly below projections of 113,000 new jobs. This represents the smallest increase in employment since December 2020. The Bureau of Labor Statistics (BLS) confirmed that the unemployment rate held steady at 4.1 percent, though several factors, such as hurricanes Helene and Milton and ongoing labor strikes, likely skewed the data. BLS noted challenges with the establishment survey, which measures employment and earnings, as the collection period was shortened due to weather-related disruptions.
Sector-specific data reveal mixed results: health care, government, and construction saw gains, adding 52,000, 40,000, and 8,000 jobs, respectively. However, manufacturing dropped sharply by 46,000 positions, primarily due to a transportation equipment manufacturing strike, while professional services lost 49,000 jobs. Average hourly wages rose modestly by 0.4 percent, but labor force participation slightly declined to 62.6 percent. Data revisions from previous months showed notable downward adjustments, with August and September payrolls each revised lower by tens of thousands. Full-time and part-time employment both declined, while the number of dual job holders saw a dip from record highs.
Market reaction was relatively mild, with the U.S. dollar index falling and Treasury yields dropping as the likelihood of a Federal Reserve rate cut increased. Financial markets were buoyant, with benchmarks rising slightly despite the dismal report. Analysts anticipate the Fed will likely proceed with a 25-basis-point rate cut at the upcoming meeting, a decision influenced by factors including labor market stability, cooling wage growth, and resilient hiring trends in the private sector. With the election imminent, these economic figures may shape voter sentiment, as job market resilience and the slowing pace of inflation remain critical to economic and political discourse.
