By Lucia Mutikani
WASHINGTON (Reuters) – U.S. job growth almost stalled in October as strikes in the aerospace industry depressed manufacturing employment while hurricanes impacted the response rate for the payrolls survey, making it hard to get a clear picture of the labor market ahead of next week’s presidential election.
The Labor Department’s closely watched employment report on Friday 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.
“This is not the clarifying report on the economy that Americans and markets needed before next week’s election to answer whether voters are better off than they were four years ago,” said Christopher Rupkey, chief economist at FWDBONDS.
“The one thing we can rule out is that the dramatic slowdown in nonfarm payroll jobs does not indicate the economy is at a tipping point and in danger of falling over the cliff and into recession.”
Nonfarm payrolls increased by 12,000 jobs last month, the smallest gain since December 2020, the Labor Department’s Bureau of Labor Statistics said. The economy added 112,000 fewer jobs in August and September than previously reported.
Economists polled by Reuters had forecast payrolls would rise 113,000. Estimates ranged from no jobs added to 200,000 positions created.
The BLS said the initial collection rate for the establishment survey in October, from which payrolls are calculated, was well below average, but noted that the collection rates were similar in storm-affected and unaffected areas.
“A larger influence on the October collection rate for establishment data was the timing and length of the collection period,” the BLS said. “This period, which can range from 10 to 16 days, lasted 10 days in October and was completed several days before the end of the month.”
Hurricane Helene devastated the U.S. Southeast in late September and Hurricane Milton lashed Florida a week later. A total of 512,000 people said they could not go to work because of bad weather, the most since January.
Nearly all the jobs added last month were in the healthcare and government sectors. Healthcare employment increased by 52,000 jobs, spread across ambulatory and nursing care facilities.
Government payrolls increased by 40,000, boosted by state and local government hiring. But the strikes by machinists at Boeing and Textron, an aircraft company, caused manufacturing employment to decline by 46,000 positions.
Workers who do not receive a paycheck during the survey period, which includes the 12th day of the month, are counted as unemployed in the survey of establishments.
Temporary help services employment declined by 49,000 jobs.
The unemployment rate was unchanged at 4.1% largely because 220,000 people left the labor force, offsetting a drop of 368,000 jobs in household employment.
FED MEETING
Economists expect the Federal Reserve to sort through the noisy data and cut interest rates by 25 basis points at its Nov. 6-7 policy meeting. A rise in the unemployment rate to 4.3% in July from 3.8% in March was one of the catalysts for the U.S. central bank’s unusually large half-percentage-point rate cut in September, the first reduction in borrowing costs since 2020.
The Fed’s policy rate is now set in the 4.75%-5.00% range, having been hiked by 525 basis points in 2022 and 2023.
The dollar was trading lower against a basket of currencies after the release of the employment report. U.S. stocks opened higher and U.S. Treasury prices rose.
Though employers have pulled back on hiring, they are retaining their workers, underpinning wage gains and consumer spending. Average hourly earnings rose 0.4% last month after gaining 0.3% in September. Wages increased 4.0% in the 12 months through October after advancing 3.9% in September.
(Reporting by Lucia Mutikani; Editing by Andrea Ricci, Dan Burns and Paul Simao)
