A recruiting sign outside a Stewart gas station in Catskills, New York, U.S., Wednesday, October 2, 2024.
Angus Mordants | Bloomberg | Getty Images
Powerful hurricanes and massive labor strikes are likely to knock a big chunk out of nonfarm payrolls in October, which is expected to be the slowest month for job creation in nearly four years.
Economists surveyed by Dow Jones expect the U.S. Bureau of Labor Statistics to report on Friday that employment rose by just 100,000 this month due to the impact of Hurricanes Helen and Milton and the Boeing Co. strike. If accurate, this would be the lowest employment total since December 2020 and a sharp drop from September’s 254,000.
However, the report is expected to be released at 8:30 a.m. ET, with the unemployment rate expected to remain unchanged at 4.1%.
“When we look at this (key employment data), the unemployment rate will remain low and I think wages will grow faster than inflation, both of which will highlight the health of the U.S. economy,” said Chief Economist Michael Michael Arone said.
In terms of wages, average hourly earnings are expected to increase by 0.3% this month, up 4% from the same period last year. The annual data is the same as in September, further supporting the view that inflation is sticky but not accelerating.
Regardless of the outcome, the market may choose to read the report carefully since so many one-time hits dampen hiring.
“The top-line numbers may be a little noisy, but I think they’re enough to continue to establish that the soft landing is intact and that the U.S. economy is still in good shape,” Aron added.
Economic damage from hurricanes could reach record levels, while a strike at Boeing has sidelined 33,000 workers.
Goldman Sachs estimates that Helen could reduce employment by as much as 50,000 people, although Hurricane Milton may occur too late to affect employment numbers in October. Goldman Sachs added that the strike at Boeing, meanwhile, could lead to a loss of 41,000 jobs in total employment, which is expected to increase by 95,000.
The data is already solid
However, the closely watched jobs report showed that hiring continued apace and layoffs were low despite the damage from the storms and strikes.
payroll processing company ADP reported this week that private businesses hired 233,000 new workers in October, well above expectations, while initial jobless claims fell to 216,000, the lowest level since late April.
Still, the White House estimates these events could cumulatively result in a loss of as much as 100,000 jobs. “These disruptions will make this month’s jobs report harder to read than usual,” Council of Economic Advisers Chairman Jared Bernstein said on Wednesday.
Employment data has generally been noisy in the post-COVID world.
Earlier this year, the Bureau of Labor Statistics announced baseline revisions that reduced the number of workers by 818,000 in the 12 months to March 2024 compared with the previous figure. The net decrease is estimated at 310,000.
“This report will reinforce the big picture that the labor market is still growing. But the fact is, it’s growing, but it’s slowing,” said Julia Pollak, chief economist at ZipRecruiter. “Growth is slowing. , and also become more concentrated in a few industries.”
The main areas of job creation this year are government, health care, and leisure and hospitality. Pollak said that’s still the case, especially in health care, while ZipRecruiter is also seeing greater interest in technology and related businesses like finance and insurance.
However, she said the overall picture is that the market is slowing and will need help from the Federal Reserve to cut interest rates to stem the decline.
“Job growth has been below pre-pandemic averages over the past two quarters, and job growth has been unusually narrowly distributed,” Pollack said. “This has had a real impact on job seekers and workers who feel they have leverage. Weakened, many of them are struggling to find acceptable jobs. So I do think the Fed’s focus should be firmly on the labor market.
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