(AFP) – US job growth slowed drastically in October, hit temporarily by hurricanes and labor strikes, in a final major economic snapshot in a razor-edge presidential election campaign where cost-of-living worries have dominated voter concerns. The world’s biggest economy added just 12,000 jobs last month, far below expectations and down from a revised 223,000 in September, said the Department of Labor. The unemployment rate was unchanged at 4.1 percent.
The hiring and unemployment data will be scrutinized by the teams of both presidential candidates — Democrat Kamala Harris and Republican Donald Trump — but employment numbers would have been higher if not for devastating hurricanes and worker strikes. Unusually weak hiring numbers threaten to affect how Americans view the jobs market, some analysts warned. The collective impact of Hurricanes Helene and Milton, alongside work stoppages by Boeing workers and others, could cut job growth by up to 100,000 positions, Council of Economic Advisers Chair Jared Bernstein earlier said. But the latest figure was still markedly below a market consensus estimate of 120,000. This is the slowest rate of hiring since late 2020 and since President Joe Biden took office.
“Job growth is expected to rebound in November as our hurricane recovery and rebuilding efforts continue,” Biden said Friday, highlighting a new contract proposal, too, for striking Boeing workers. But Trump called the report “a great embarrassment,” blaming Harris for job declines in manufacturing although this was heavily hit by strike activity. Average hourly earnings rose 0.4 percent from September, slightly above expectations.
The Labor Department said its survey is “not designed to isolate effects from extreme weather events.” But it added: “It is likely that payroll employment estimates in some industries were affected by the hurricanes.” The report also said manufacturing employment fell by 46,000, on a 44,000 drop in transportation equipment manufacturing that was largely due to strike activity. Besides some 33,000 Boeing workers on strike, others doing so included 5,000 machinists at Textron Aviation and 3,400 hotel workers, noted EY senior economist Lydia Boussour. In the labor survey tracking hiring, workers on strike for the entire reference pay period are not counted as employed, Boussour added.
Meanwhile, Hurricane Helene made landfall in late September, meaning some people were probably unable to return to work when the survey was carried out. Similarly, the survey week coincided with Hurricane Milton’s landfall. Economists Carl Weinberg and Rubeela Farooqi of High Frequency Economics suggested treating the hiring component of the report “as an unreliable indicator” of the market’s true condition.
A weaker headline hiring figure “will likely weigh on how people view economic conditions,” Farooqi told AFP. More broadly, “households are not feeling the benefits of a still strong labor market,” she added, pointing to cumulative inflation. But economist Harry Holzer, a nonresident senior fellow at the Brookings Institution in Washington, expects the public already expected the lower numbers this time. A bigger problem would be a sharp slowdown after taking temporary factors into account.
“Rising incomes are keeping consumers’ wallets open. Any disruption of this would suggest the economy’s growth engine is starting to sputter,” Nationwide economist Oren Klachkin said. “The labor market is cooling down but I wouldn’t call it cold,” he said.
Strikes and hurricanes only partially explain weakness, cautioned economist Samuel Tombs of Pantheon Macroeconomics. Payrolls excluding temporary help or leisure and hospitality — usually hard-hit by hurricanes — alongside transport equipment manufacturing, saw just half their average increase in the previous 12 months, he said. There was no impact on the unemployment rate as those on strike or unable to work due to weather are still counted as employed, he said. But the survey tracking this showed a 368,000 drop in employment, added Mortgage Bankers Association chief economist Mike Fratantoni. While there are not large layoffs, there has been ongoing reduction in job openings, he added.
Analysts expect the Fed to lower rates by a quarter percentage point next week, rather than have no cut. “Fed officials will likely look through the noisy payroll figures,” said Boussour.
– Beiyi SEOW
© 2024 AFP
