US job growth slows sharply in October; unemployment rate unchanged at 4.1%
US JOB growth slowed sharply in October amid disruptions from hurricanes and strikes by aerospace factory workers, but the unemployment rate held steady at 4.1 per cent, offering assurance that the labour market remained on solid footing ahead of the Nov 5 election.
Non-farm payrolls increased by 12,000 jobs last month after surging by a downwardly revised 223,000 in September, the Labor Department’s Bureau of Labor Statistics (BLS) said on Friday (Nov 1).
Economists polled by Reuters had forecast payrolls rising 113,000. Estimates ranged from no jobs added to 200,000 positions created.
Hurricane Helene devastated the south-east in late September and Hurricane Milton lashed Florida a week later. A total 41,400 new workers were strike, including machinists at Boeing and Textron, an aircraft company, when employers were surveyed for October’s employment report. The remaining 3,400 were workers at three hotel chains in California and Hawaii.
Workers who do not receive a pay cheque during the survey period, which includes the twelfth day of the month, are counted as unemployed in the survey of establishments from which the payrolls number is calculated.
The Labor Department’s closely watched employment report was the last major economic data before Americans head to the polls to choose Democratic Vice-President Kamala Harris or Republican former president Donald Trump as the country’s next president.
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Polls show the race is a toss-up. Americans have not warmed up to the economy’s strong performance, which has outshined its global peers, rankled by high prices for food and rents. Low layoffs have been the hallmark of the labour market’s strength.
The unemployment rate was unaffected by the distortions, as the striking workers would be counted as employed in the household survey from which the jobless rate is derived.
Workers unable to work because of bad weather would be reported as employed “with a job, but not at work”, as per the BLS’ classification.
Economists expect the Federal Reserve to sort through the noise and cut interest rates by 25 basis points (bps) next Thursday. A rise in the unemployment rate to 4.3 per cent in July from 3.8 per cent in March was one of the catalysts for the US central bank’s unusually large half-percentage-point interest rate cut in September, the first reduction in borrowing costs since 2020.
The Fed’s policy rate is now set in the 4.75 to 5 per cent range, having been hiked by 525 bps in 2022 and 2023.
Though employers have pulled back on hiring, they are retaining their workers, underpinning wage gains and consumer spending. Average hourly earnings rose 0.4 per cent after gaining 0.3 per cent in September. Wages increased 4 per cent in the 12 months through October, after advancing 3.9 per cent in September. REUTERS
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