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 reduce some of the nonfarm payrolls in October, which is expected to be the weakest month for job creation in nearly four years.
Economists surveyed by Dow Jones expect the Bureau of Labor Statistics to report Friday that the number of employees rose by just 100,000 month-over-month, held back by hurricanes Helene and Milton and the Boeing strike. If their prediction is correct, this would be the lowest number of jobs since December 2020 and a huge drop from September's 254,000.
However, the report, which will be released at 8:30 a.m. ET, is also expected to indicate that the unemployment rate will remain unchanged at 4.1%.
“If we see through this [headline jobs number]”Unemployment will remain low and I think wages will grow 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.
On the wage front, the average hourly wage is expected to rise by 0.3% this month and by 4% compared to last year. The annual figure will be the same as September, reinforcing the narrative that inflation is stubborn but not accelerating.
Whatever the results, markets may choose to read through the report since so many one-off hits have dampened sentiment.
“Sales numbers will be a little choppy, but I think there will be enough data to continue to see that the soft landing is intact and the U.S. economy remains in good shape,” Arone added.
The hurricanes caused potentially historic levels of financial damage, while the Boeing strike sidelined 33,000 workers.
Goldman Sachs estimates that Helene saved up to 50,000 jobs in payroll, although Hurricane Milton likely hit too late to affect the October figure. The Boeing strike, meanwhile, could cut total employment by 41,000, added Goldman, which forecasts total employment would rise by 95,000.
The data was solid
But indicators ahead of the widely watched jobs report show that hiring continues to progress quickly and layoffs are low, despite the damage caused by the storms and strikes.
Payroll company ADP reported this week that private companies added 233,000 workers in October, well above forecast, while initial jobless claims fell to 216,000, the lowest since late April.
Nevertheless, the White House believes that the events overall could affect the number of employees by up to 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 on Wednesday.
Employment numbers have generally been loud in the post-Covid era.
Earlier this year, the BLS announced benchmark revisions that resulted in 818,000 fewer than previous counts in the 12-month period ending March 2024. Year to date through July, revisions have shown a net 310,000 fewer than original estimates.
“This report will reinforce the bigger picture, which is that the job market is still growing. But the fact is that while it is growing, it is slowing,” said Julia Pollak, chief economist at ZipRecruiter. “Growth is slowing down and is becoming increasingly concentrated in a few sectors.”
The top areas of job creation this year were government, healthcare, and leisure and hospitality. Pollak said that continues to be the case, particularly in healthcare, while ZipRecruiter has also seen greater interest in skilled trades, as well as financial and related businesses such as insurance.
However, she said the general picture shows a slowing market that will need some help from Federal Reserve interest rate cuts to halt the decline.
“For the past two quarters, job growth has been below pre-pandemic averages, and job gains have been unusually narrowly distributed,” Pollak said. “This has a real impact on job seekers and workers who feel their influence is diminishing, and many of them are struggling to find acceptable work. “So I think the Fed’s attention should be focused entirely on the labor market.”
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