The U.S. labor market slowed significantly in October, with nonfarm payrolls increasing by just 12,000 positions, marking the weakest increase since December 2020, according to the latest data from Bureau of Labor Statistics.

The unemployment rate remained steady at 4.1 percent, with the number of Americans without jobs holding relatively steady at 7 million. However, these figures reflect an increase in unemployment compared to the same period last year — 3.8%.

October’s employment summary not only revealed sluggish job growth, but also included significant downward revisions to previous months. August job gains were revised down to 78,000, and September’s original estimate was cut to 223,000. These revisions collectively reduced the previously reported job creation figures by 112,000.

Employment in the health care and government sectors, usually bright spots for the economy, continued to rise in October. Healthcare added 52,000 jobs, in line with the average monthly gain of 58,000 over the past year. In addition, government employment followed its upward trend with an increase of 40,000 positions, close to the average monthly gain of 43,000 over the past 12 months.

In the business and professional services sector, temporary help services saw a major decline of 49,000 jobs. Since peaking in March 2022, temporary help jobs have fallen by 577,000.

Moreover, manufacturing employment fell by 46,000 jobs last month, mainly because of a 44,000-job drop in transportation equipment manufacturing, largely attributed to strike activity, the BLS noted.

In a speech in mid-October, Federal Reserve Governor Christopher Waller addressed the potential impact of recent events on the October jobs report. He noted that two major factors—the recent hurricanes and the Boeing strike— would significantly affect employment figures.

Waller estimated that these events could reduce job growth by more than 100,000 positions for the month. However, he stressed that this substantial drop in employment would likely be “temporary” rather than indicative of a lasting trend in the labor market.

Boeing Strike

When the Labor Department conducted its surveys of households and establishments, about 44,000 U.S. workers were on strike. The majority of these strikers — about 33,000 — were Boeing machinists who began their work stoppage on September 13. It marked their first strike since 2008, following a decisive vote against a union-backed labor contract.

The striking workers are put to the vote on a new contract proposal on Monday. This enhanced offer includes a 38% salary increase over four years and an increased signing bonus. The union approved this proposal, informing its members that they had negotiated the best terms possible from Boeing. Union leadership indicated they had reached the limit of concessions they could get from the aircraft manufacturer, Reuters reported.

However, Boeing’s influence on US employment numbers is expected to persist. CEO Kelly Ortberg recently announced plans to cut the company’s global workforce by 10%, which equates to 17,000 jobs.

Ortberg, who assumed the role of CEO in early August, emphasized the need for Boeing to streamline its operations and focus on its core businesses.

“One of the things I’ve heard from a lot of employees is that there are too many expenses. It’s slowing them down from being able to get their work done,” he told investors on a third-quarter earnings call. “So we’re really going to focus this workforce reduction on streamlining those general activities, consolidating the things that can be consolidated.”

Hurricanes Helene and Milton

The October data from the Labor Department surveys marked the first collection since Hurricanes Helene and Milton hit the US, causing extensive damage in the Southeast.

Economic analysts anticipated labor market challengesincluding job losses and market distortions as a result of the storms. Areas directly affected by the hurricanes were expected to see sharp increases in unemployment as businesses temporarily shut down due to physical damage or infrastructure failures.

Major disasters can have a profound impact on the labor market, causing immediate unemployment, disrupting normal business activities, and leading to widespread economic downturns in various sectors. Recovery from such devastating events usually requires substantial investment of both financial and time resources.