Messy October jobs report muddied by strikes and storms ahead of Election Day

Boeing 737 Max fuselages sit on railcars during an ongoing strike by the company's factory workers in Seattle, Washington, on October 30, 2024.

Employment growth in America’s manufacturing industry is languishing.

The industry lost 46,000 jobs in October, the Labor Department said Friday, most of it due to striking workers at Boeing. That means those jobs are poised to come back into the fold once a resolution is reached between the union and the company, but manufacturing’s job record over the past year looks underwhelming.

So far this year, manufacturing has added jobs in only four of the past 10 months through October, and the biggest monthly gain was just 7,000 jobs back in April. During the same period last year, manufacturing added jobs in five of those 10 months, with the biggest gain in September 2023, at 13,000 jobs added.

In a separate report released Friday, the Institute for Supply Management reported that economic activity in America’s manufacturing sector contracted in October for the seventh month in a row, marking the 23rd time in the last 24 months that activity shrunk.

“Demand remains subdued, as companies continue to show an unwillingness to invest in capital and inventory due to concerns (for example, inflation resurgence) about federal monetary policy direction in light of the fiscal policies proposed by both major parties,” Timothy Fiore, chair of the ISM Manufacturing Business Survey Committee, said in a release.

A machinery manufacturer told ISM that “sales have been very slow the past six months,” but that there are signs of pent-up demand under the surface.

At the start of this year, the unemployment rate for teens between the ages of 16 and 19 was 10.6%. In September, it hit 14.3%, the highest level since January 2021. Then, last month, it dropped by half a percentage point to 13.8%, the largest one-month decline across all demographic groups the Bureau of Labor Statistics studies.

Some economists have attributed the elevated teen unemployment rate to California’s $20-an-hour minimum wage law for fast food workers that took effect in April, claiming it’s caused these employers to avoid hiring as many teens.

Even after accounting for last month’s decline, the teen unemployment rate is the highest across all demographic groups, and it’s well above the national unemployment rate of 4.1%.

The US flag flies over the Federal Reserve on October 3 in Washington.

The government’s latest employment figures were murky, but they weren’t terrible when factoring in the temporary effects of hurricanes and labor strikes. America’s job market is cooling — not falling off a cliff — as inflation settles back to a more normal state.

Economists refer to that situation as “a soft landing,” an elusive and exceptionally rare scenario that has only occurred once in the mid-1990s, according to conventional wisdom. It’s no longer a matter of when the US economy will achieve a soft landing, but rather how long it can last. Some have made the call already: James Bullard, former president of the Federal Reserve Bank of St. Louis, told CNN previously “I think we should declare a soft landing now,” and JPMorgan Chase, America’s largest bank, declared as much in an earnings call last month.

The Fed’s preferred inflation index rose 2.1% for the year ended in September, a slowdown from 2.3% in August, and just a whisper away from the Fed’s 2% target. That’s according to data released Thursday, and is down markedly from a four-decade peak of 7.2% reached in June 2022.

And yes, the October jobs report wasn’t impressive, but it did not reflect an ailing job market either.

“Taking a step back: overall it is clear that the labor market has normalized,” Lauren Goodwin, economist and chief market strategist at New York Life Investments, said in a note Friday. “But we think it’s unlikely that we are seeing a tipping point in the labor market just yet.”

Not only is it likely that October’s payroll growth figure will be revised higher, but the unemployment rate held steady in October at a low 4.1% and new applications for unemployment benefits remain at historically low levels.

A soft landing is here. Now it’s just a matter of how long it can last.

An attendee holds pamphlets at the Albany Job Fair in Latham, New York, on October 2.

Where the jobs were lost/gained: Health care and government, two of the three major drivers of job growth in recent years, continued to add employment, showing increases of 51,300 jobs and 40,000 jobs, respectively.

The third leg of that stool, leisure and hospitality, however, lost 4,000 jobs. Given Florida’s tourism-centric economy, this was one industry expected to show the impacts from the hurricanes.

The construction industry also appears to have been weakened by storm activity as well, noted Dean Baker, senior economist at the Center for Economic and Policy Research. That sector recorded a net gain of 8,000 jobs, but has averaged 20,000 this year through September, he said.

The largest job losses occurred in temporary help services (-48,500); professional and business services (-47,000); and manufacturing (-46,000). BLS noted that the manufacturing jobs declined due to strike activity.

Labor force participation: The percentage of the working-age population that is employed or seeking a job ticked down to 62.6% from 62.7% in October. That rate has bounced between 62.5% and 62.7% all year.

The employment to population ratio edged down as well, to 60% from 60.2%, BLS data shows.

Commuters walk under an American flag at the Staten Island Ferry terminal in Manhattan on July 1 in New York City.

A little more than 81% of native-born residents between the ages of 25 and 54 were employed in October, near the record share seen in June 2023, according to Bureau of Labor Statistics data analyzed by Ernie Tedeschi, a former chief economist at the White House Council of Economic Advisers under the Biden administration.

The ratio is also higher than at any point in the Trump administration, Tedeschi, now the director of economics at The Budget Lab at Yale University, told CNN. (The agency began publishing native- and foreign-born employment by age in 2007.)

Employment among native-born Americans has become a talking point in the 2024 presidential campaign, with former President Donald Trump and his allies highlighting that overall employment among the native born has dropped in the past year or so, while it has shot up for the foreign born.

Looking at foreign-born residents in their prime working years, nearly 78% were employed in October, also relatively close to its historically high share in the spring of 2023, Tedeschi found. (The foreign-born includes citizens, permanent residents and undocumented immigrants.)

Examining just prime-age workers factors out the aging of the native-born population, which would depress the share of those employed even if labor market conditions remained steady, Tedeschi said.

The tight labor market of recent years has helped all workers — particularly the native born, he said.

“Native-born workers are among the first workers that are going to be lifted up by a strong labor market,” he said.

The Fearless Girl statue is shown in front of the New York Stock Exchange on October 30.

US stocks were higher in late morning trading on Friday as investors, buoyed by strong tech earnings, shrugged off a disappointing jobs report and looked forward to next week’s presidential election and Federal Reserve policy decision.

The S&P 500 was 1% higher; the Dow rose by more than 500 points, or 1.2%; and the Nasdaq was up by 1.3%.

“This morning’s Nonfarm Payrolls report for October certainly should be taken with a grain of salt, or possibly a whole shaker,” said Rick Polsinello, senior market strategist at the FT Institute in a note Friday. “It appears that this drop was significantly affected by hurricanes Helene and Milton, and to a lesser extent by the Boeing strike…The unemployment rate stayed steady at 4.1%, as it is not affected by storms and strikes. Also, hourly earnings were up 4% from a year earlier.”

Investors still largely expect the Federal Reserve to cut interest rates by a quarter of a percentage point at the conclusion of their meeting next Wednesday.

The US Department of Labor headquarters building is seen on August 21, 2024 in Washington, DC.

Many Republicans have asserted — without any proof — that when initial estimates of monthly job gains are later revised down by the Bureau of Labor Statistics, as has been the case with many months of data lately, it intentionally masks the true state of the economy at the time in order to help bolster Democrats’ case to voters.

That’s very much not what’s been going on, though. In fact, the BLS, which is housed under the Department of Labor, and other federal units such as the Census Bureau and the Bureau of Economic Analysis, are required to “function in an environment that is clearly separate and autonomous from the other administrative, regulatory, law enforcement, or policy-making activities within their respective Departments,” per an Office of Management and Budget directive. And the revisions that come with every job report are simply happening because the BLS gets more complete information that often changes its original estimates.

The October jobs report was no exception: The estimated number of new hires in September and August was revised down Friday by a total of 112,000. Republican Sen. Marco Rubio from Florida posted Friday morning on X that the latest revisions were a sign that the initial estimates were manipulated to make the economy under the Biden-Harris administration appear better than in reality.

Read more here.

There were an estimated 7.4 million unfilled jobs on the last day of September, a drop from August’s revised tally of 7.86 million openings, according to new data released Tuesday by the Bureau of Labor Statistics. The largest drop-offs in openings were in industries that have driven much of the job growth in recent years: health care and social assistance, and government, according to the report.

Economists were expecting the number of job openings to land at around 7.9 million, declining from the prior month’s initial estimate of 8.04 million, according to FactSet estimates.

The decline in job openings reflects a labor market that has slowed back to a pre-pandemic pace after experiencing years of blockbuster growth: The rate of openings as a percentage of total employment mirrors what was seen throughout much of 2018 and 2019, BLS data shows.

“Decreasing or subdued job openings, quits and hiring rates last month all point to a cooler labor market compared to one year ago,” Elizabeth Renter, senior economist for NerdWallet, wrote in commentary issued Tuesday. “Employers aren’t bringing many folks on, and workers aren’t super eager to leave the comforts of their existing roles in the current environment.”

Read more here.

Attendees at the Albany Job Fair in Latham, New York, on Wednesday, October 2.

US employers added just 12,000 jobs last month, according to the government’s latest tally. But that figure will very likely get revised.

Monthly payroll figures have tended to get revised lower after they were initially reported. For example, job growth in August and September were revised down by a sizable 112,000 total jobs, according to Friday’s data. An annual benchmark review of employment data showed there were 818,000 fewer jobs added in the year ended in March 2024 than were initially reported, the largest downward revision since 2009.

But that might not be the case for October. In 2017 when major hurricanes hit the United States, initial employment figures showed steep job losses, but those were later revised upward when more data was collected. Natural disasters affect the data collection process and the Labor Department states in every jobs report that revisions “result from additional reports received from businesses and government agencies since the last published estimates and from the recalculation of seasonal factors.”

“In a hurricane, the top priority is not sending your numbers into BLS,” Claudia Sahm, chief economist at New Century Advisors, told CNN’s Alicia Wallace previously. “The estimates in a natural disaster tend to get more imprecise.”

Initial employment figures are not inflated intentionally for political purposes.

Americans’ paychecks grew in October at the fastest annual pace in five months.

Workers made $35.46 an hour in October, on average, which was up 13 cents from September, or 0.4%. From a year earlier, average hourly earnings were up by a robust 4%, the highest annual rate since May. That’s also the third consecutive month of accelerating annual wage growth.

A red-hot job market was previously seen as a source of inflation pressure, with economists frequently pointing to the possibility of employers passing rising labor costs onto consumers. But inflation has come down substantially over the past two years and other factors pushing up inflation, such as housing costs, have been more of an obstacle for the Federal Reserve’s mission to rein in price pressures.

That means faster wage growth, which now translates to even higher real earnings, is all around good news for the US economy and the American worker.

People walk outside of the New York Stock Exchange (NYSE) on October 16, 2024 in New York City.

US markets opened higher Friday morning following the weakest jobs report since December 2020.

Investors, say analysts, are simply focused on other things.

“Markets can likely park the October jobs report to the side,” wrote Seema Shah, chief global strategist at Principal Asset Management, in a note Friday. “Quite clearly, the hurricane has taken a heavy toll on the numbers, clouding the picture of labor market strength, and so should not impact the Fed’s policy rate path.”

Big tech, meanwhile, sent major indexes higher after Amazon and Intel delivered-better than-expected third-quarter earnings reports.

The S&P 500 opened 0.4% higher; the Dow was up 191 points, or 0.5%; and the Nasdaq gained 0.5%.

Markets soared higher as investors shrugged off the morning’s jobs data. Here’s what analysts and strategists are telling their clients about the news:

“In spite of the weak headline number, today’s report shouldn’t raise alarm bells for job seekers, workers, or policymakers — especially if the hurricane and strike impacts prove temporary. If future reports are similarly weak, with limited job gains and persistent downward revisions to prior data, then that will be real cause for concern. But for now, a soft landing is still on the table, though it will require stronger job gains and steady unemployment in the coming months. For policymakers, this report is not likely to shift plans too much, but we can probably expect to see more interest rate cuts and support for the labor market on the horizon.” Cory Stahle, economist at Indeed Hiring Lab

“The big picture is that the labor market continues to cool down (even beyond hurricane effects), and this should keep the Fed on pace for rate cuts in November and December. Payrolls are likely to rebound in November, and we’ll ultimately have to take the average of October and November for more clarity.” Sonu Varghese, global macro strategist at Carson Group

“Markets can likely park the October jobs report to the side. Quite clearly, the hurricane has taken a heavy toll on the numbers, clouding the picture of labor market strength, and so should not impact the Fed’s policy rate path. And yet, a deeper ponder of the numbers suggests that, beneath all the noise and disruption, is a fundamentally slowing labor market. The consensus forecast for a 100,000 increase in payrolls was already taking the hurricane effect into account, so the significant downside surprise indicates underlying weakness.” Seema Shah, chief global strategist at Principal Asset Management

“Strikes and storms weighed on this month’s jobs data with jobs growth surprising to the downside and the unemployment rate staying put. While the Fed will likely attribute some of the weakness in today’s data to one-off factors, the softness in today’s data argues for the Fed to continue its easing cycle at next week’s meeting. Stormy numbers but sky clearing for November [quarter of a percentage point] cut.” Lindsay Rosner, head of multi sector fixed income investing at Goldman Sachs Asset Management

US Federal Reserve chairman Jerome Powell holds a press conference in Washington, DC, on September 18.

The government’s latest employment figures were skewed by the effects of recent hurricanes and labor strikes, but when factoring out that noise, it’s clear that job growth is slowing. That keeps the Federal Reserve comfortably on track to cut interest rates again next week.

Employers added just 12,000 jobs last month, the Labor Department reported Friday, the weakest monthly gain since December 2020. The department said in a release that a loss of 44,000 manufacturing jobs last month was “largely due to strike activity,” so, even if those were added back to October’s total, it would still point to a month of tepid payroll growth. Job growth in August and September was also revised down by at total of 112,000 jobs.

“For the Fed, the most actionable part of the October jobs report is the revisions to August and September data,” Bill Adams, chief economist at Comerica Bank, said in commentary Friday. “They confirm that the labor market has cooled, and will reinforce the Fed’s view that there are equal risks to their maximum employment mandate as to their mandate for stable prices.”

Fed officials have said in recent speeches they’re trying to prevent the job market from deteriorating — and that interest rates are still at restrictively high levels. The Fed is responsible for promoting maximum employment, in addition to stabilizing prices.

The futures market is currently pricing in with near certainty that the Fed will deliver a quarter-point rate cut next week.

People cast their in-person early ballot for the 2024 general election at a polling station in Ann Arbor, Michigan, on October 31.

“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 Chris Rupkey, chief economist at Fwdbonds.

While striking workers and a negative impact on data collection from two major hurricanes both had a major effect on the jobs total, “it will take another month to see just how much the labor market stalled, if at all,” he wrote in commentary issued Friday morning.

“The message today is that the labor market has stalled for technical reasons, the Boeing strike and hurricanes, but the rest of the economy continues to expand at a moderate pace,” he said, citing robust consumer spending, strong GDP and inflation close to the Federal Reserve’s target.

Yes, this was a muddied-up report, and we’ll have to wait a month or two for the dust to settle from bad collection data, two hurricanes and a massive strike to fully understand what truly happened last month in the labor market.

But no matter how much sugar we pour on this lousy data to coat it, it’s also just not a great jobs report. Hiring has been trending lower over the past year. The US economy has added an average of 170,000 jobs each month so far this year. That’s pretty good, but down from 251,000 last year and 377,000 in 2022 as the economy was recovering from the effects of the pandemic.

But hiring has slowed even further in recent months. Four of the five past months have been below or well below the year’s average — particularly last month’s 12,000 new jobs.

So we shouldn’t get unnecessarily worked up over one bad month of data. But we don’t need to bend over backwards to say this is actually really good news, either. The job market is strong, but slowing, as the Federal Reserve intended with its series of rate hikes to tamp down inflation. But any weaker job growth could present a political problem to the next president.

A hiring sign is posted on the door of a Taco Bell on August 22 in Alexandria, Virginia.

In addition to last month’s sluggish job growth, in part because of the effects of Hurricanes Helene and Milton as well as ongoing strikes, the government also revised down August and September job gains by a total of 112,000.

Employers were previously estimated to have hired 159,000 new workers in August. Now, they’re believed to have hired closer to 78,000, according to the new estimates published in the October jobs report. And hiring in September was revised down by 31,000 to 223,000.

Revisions like these are common and a standard part of the Labor Department’s goal to provide the best possible estimate of the state of the labor market. That can often change as it receives more information at later points. However, some Republicans claimed — without proof — that it is a sign the department is putting out biased initial reports.

An attendee places their resume in a drop box at the Albany Job Fair in Latham, New York, US, on October 2.

Even though job growth slowed last month to just 12,000 from a revised 223,000 in September, the unemployment rate held steady at 4.1%. While this may sound contradictory, it’s not uncommon for there to be months when job growth becomes more sluggish and the unemployment rate doesn’t rise.

That’s because the two monthly data points are products of two different surveys.

The unemployment rate is calculated from household survey data where individuals are asked about their employment situation. The number of new hires is calculated from business survey data where employers are asked about how many employees they have on their payrolls.

We knew this was going to be a bad jobs report. Predicting just how bad was tricky business for the very reasons that made this a bad jobs report: Lousy data collection.

Typically, the Bureau of Labor Statistics collects data over a range of up to 16 days — but this past month it collected data in just 10 days. That exacerbated the effects of hurricanes that put many people out of work, along with a substantial strike against Boeing. So to say this past month’s number might not be what it seems is an understatement.

Two massive hurricanes that affected wide swaths of America’s Southeast made the jobs survey difficult to conduct. It’s often hard to get people to respond to a survey when they’re displaced or picking up the pieces from a disaster. However, the Bureau of Labor Statistics said that didn’t affect this past month’s survey so much — the short collection period affected the number much more.

The final jobs report before Election Day presented a murky picture of the economy, with just 12,000 jobs added in October as hurricanes and striking workers muddied the data.

While that is far below September’s whopping total of 223,000 jobs and expectations for a 112,500-job gain, economists had projected that recent extreme weather and ongoing labor strikes would distort the data.

The unemployment rate held steady at 4.1%.

Friday’s jobs report is the last major piece of economic data to land before Election Day.