Rental signs outside a Stewart's gas station in Catskill, New York, USA, on Wednesday, October 2, 2024.
Angus Mordant | Bloomberg | Getty Images
Strong hurricanes and a major labor strike could wipe out some nonfarm payrolls for October, which is expected to be the slowest month for job creation in nearly four years.
Economists polled by Dow Jones expect the Bureau of Labor Statistics to report Friday that payrolls rose by only 100,000 this month, held back by Hurricanes Helene and Milton and the Boeing strike. If true, this would be the lowest jobs total since December 2020 and a huge drop from September's 254,000.
However, the report, which will be released at 8:30 a.m. Dutch time, is also expected to indicate that the unemployment rate will remain unchanged at 4.1%.
'If we look through that [headline jobs number]The unemployment rate will remain low and I think wages will rise faster than inflation, both of which will underscore the health of the U.S. economy,” said Michael Arone, chief investment strategist at State Street Global Advisors.
In terms of wages, average hourly wages are expected to rise 0.3% this month and 4% from a year ago. The annual figure is the same as in September and reinforces the story that inflation is persistent, but not accelerating.
Whatever the results, markets may choose to read through the report because so many one-off hits have dampened hiring.
“The top row numbers will be a little noisy, but I think there will be enough to continue to establish that the soft landing is intact and the US economy remains in good shape,” Arone added.
The hurricanes may have caused historic financial damage, while the Boeing strike has sidelined 33,000 workers.
Goldman Sachs estimates that Helene could cut as many as 50,000 from its payroll, although Hurricane Milton likely occurred too late to affect the October count. Boeing's strike could reduce the total by 41,000, Goldman added, predicting total wage growth of 95,000.
The data was solid
Yet the indicators leading to the much-discussed jobs report show that hiring has continued apace and layoffs are low, despite the damage caused by the storms and strikes.
Payroll processing company ADP reported this week that private companies hired 233,000 new workers in October, well above forecast, while initial unemployment claims fell to 216,000, the lowest level since late April.
Still, the White House estimates that the events together could impact payrolls by as many as 100,000. 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 have generally been noisy in the post-Covid era.
Earlier this year, the BLS announced benchmark revisions that cut 818,000 from previous counts in the twelve-month period through March 2024. So far through July, revisions have subtracted a net 310,000 from the original estimates.
“This report will reinforce the big picture, which is 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 becoming more narrowly concentrated in just a few sectors.”
The main areas for job creation this year are government, healthcare and the leisure and hospitality sector. Pollak said this continues to be the case, especially for healthcare, while ZipRecruiter has also seen increased interest in skilled trades, along with financial and related businesses such as insurance.
However, she said the overall picture is of a slowing market that will need some help from Federal Reserve rate cuts to halt the decline.
“Over the past two quarters, job growth has been below the pre-pandemic average, and job growth has been unusually narrowly distributed,” Pollak said. “That has real consequences for job seekers and workers who have felt their leverage eroding, and many of them are struggling to find acceptable employment. So I think the Fed's attention should be firmly focused on the labor market.”