Recruitment signs outside a Stuart gas station in Catskill, New York, US, on Wednesday, October 2, 2024.
Angus Mordaunt | Bloomberg | Getty Images
Strong hurricanes and a major labor strike could drag down much of the October nonfarm payrolls report, which is expected to be the slowest month of job creation in nearly four years.
Economists surveyed by Dow Jones expect the Bureau of Labor Statistics to report on Friday that payrolls increased by only 100,000 during the month, affected by Hurricanes Helen and Milton as well as the Boeing strike. If accurate, this would be the lowest payrolls total since December 2020 and a significant drop from the 254,000 in September.
The report, which will be released at 8:30 a.m. EST, is also expected to indicate that the unemployment rate will remain unchanged at 4.1%.
“When we look at that (headline jobs number), the unemployment rate will remain low, and I think wages will grow faster than inflation, both of which will confirm the health of the American economy,” Chairman Michael Arone said. Investment strategist at State Street Global Advisors.
Regarding wages, average hourly earnings are expected to rise by 0.3% for the month and 4% compared to last year. The annual figure is the same as in September and reinforces the narrative that inflation is steady but not accelerating.
Whatever the results, markets may choose to look at the report, as many of the findings were one-offs that dampened hiring.
“The upper numbers will be a bit noisy, but I think there will be enough to continue to determine whether a soft landing is in order and the US economy remains in good shape,” Arone added.
The hurricanes caused what could be historic levels of financial damage, while a Boeing strike sidelined 33,000 workers.
Goldman Sachs estimates that Helen could cut up to 50,000 jobs from the payroll count, although Hurricane Milton may have happened too late to impact the October number. Goldman added that the Boeing strike, meanwhile, could cut the total by 41,000 jobs, and total payrolls are expected to grow by 95,000.
The data was constant
However, indicators leading up to the widely watched jobs report show that hiring has continued apace and layoffs are low, despite damage from storms and strikes.
Payroll processing firm ADP reported this week that private companies hired 233,000 new workers in October, well above expectations, while initial jobless claims fell to 216,000, equal to the lowest level since late April.
However, the White House estimates that cumulative events could reach 100,000 jobs. “The disruptions will make interpreting this month's jobs report more difficult than usual,” Jared Bernstein, chairman of the Council of Economic Advisers, said Wednesday.
Jobs numbers overall have been roaring in the post-Covid era.
Earlier this year, the Bureau of Labor Statistics (BLS) announced benchmark revisions that dropped 818,000 from previous counts in the 12-month period through March 2024. Year-to-date through July, the revisions resulted in a net 310,000 deductions from initial estimates.
“This report will reinforce the big picture, which is that the labor market is still growing,” said Julia Pollack, chief economist at ZipRecruiter. “But the reality is that it is growing, but it is slowing down.” “Growth is slowing and also becoming more concentrated in just two sectors.”
The leading areas of job creation this year were government, healthcare, entertainment and hospitality. This remains the case, especially for healthcare, Pollack said, while ZipRecruiter has also seen greater interest in skilled trades as well as finance and related businesses such as insurance.
However, she said the overall picture is one of a slowing market that will need some help from interest rate cuts from the Federal Reserve to halt the decline.
“In the last two quarters now, job growth has been below the pre-pandemic average, and job gains have been unusually narrowly distributed,” Pollack said. “This has real implications for job seekers and workers who have felt their leverage eroded, many of whom are struggling to find some sort of acceptable job. So I think the Fed's attention should be firmly focused on the labor market.”
