Released on Friday, November 1, by the Bureau of Labor Statistics, the October Jobs report indicated a net addition of 12,000 jobs over the course of the month. A far cry from the expected gain of 112,500, October’s report has raised substantial questions regarding the state of the economy. With a rapidly shifting market and incoming political administration, it is imperative that October’s figures are understood with context.
The marked difference between expected and actual employment figures can be primarily attributed to two factors: hurricanes and labor strikes. Hurricanes Helene and Milton (reaching land on September 26 and October 9 respectively) severely limited the BLS’s capacity to collect data in certain areas. The time span of data collection was similarly strained by extraordinary weather, falling to ten days from a standard maximum of 16. While the impact of these circumstances cannot be precisely quantified, the dramatic shift in response rate (from an average of 65% over the last four years to 47.4% in October, the lowest since 1991) suggests it to be significant. Finally, job growth in weather-dependent industries, namely hospitality and construction, fell in accordance with conditions.
With respect to labor strikes, Boeing employees led in both volume and airtime. Advocating for a 40% increase in wages and reintroduced pension plan, nearly 33,000 Boeing machinists agreed to cease work indefinitely. The strike has since been resolved. Nonetheless, exacerbated further by strikes at Textron, net manufacturing jobs fell by 46,000 for the month of October.
Despite these extenuating circumstances, it is clear that the labor market is cooling organically. The labor force participation rate has fallen marginally, from 62.7% to 62.6%, for the month of October. Average hourly earnings, a figure that has proven persistently slow-growing over the past two years, held unchanged at 4% for year-over-year growth. Finally, recognizing the current deceleration of the economy, the Federal Reserve opted to reduce interest rates by 0.25% on November 7th.
In light of the October Jobs report, interest rates can be expected to fall further in the near future. By extension, economic and stock growth is projected. Naturally, however, President Trump’s future policies can significantly impact this trend.
