WASHINGTON >> U.S. job growth nearly stagnated in October as strikes in the aerospace industry depressed manufacturing employment while hurricanes shortened the payroll period, making it difficult to get a clear picture of the labor market ahead next week’s presidential election.

The closely watched Labor Department jobs report today was the last major economic date before Americans head to the polls to elect Democratic Vice President Kamala Harris or former Republican President Donald Trump as the country’s next president. Polls show the race is a disappointment.

However, the labor market is cooling, with employment growth for August and September revised down by 112,000 jobs. While the unemployment rate held steady at 4.1% in October, that was because more people left the workforce. Economists expected Federal Reserve officials to reject the report and cut another interest rate when they meet next week.

“This is not the clarifying report on the economy that Americans and markets needed ahead of next week’s election to answer whether voters are better off than they were four years ago,” said Christopher Rupkey, chief economist at FWDBONDS.

“The only thing we can rule out is that the dramatic slowdown in non-farm payrolls does not indicate that the economy is at an inflection point and is in danger of falling over the cliff and into recession.”

Nonfarm payrolls rose by 12,000 jobs last month, the smallest gain since December 2020, the Labor Department’s Bureau of Labor Statistics said. The economy added 112,000 fewer jobs in August and September than it previously reported. Economists polled by Reuters had expected wages to rise by 113,000.

Hurricane Helene devastated the southeastern US in late September, and Hurricane Milton hit Florida a week later.

The response rate to the October establishment survey, from which wages are calculated, fell to 47.4%. This was the lowest reading since January 1991 and was well below the 69.2% average for October over the past five years.

The household survey from which the unemployment rate is derived found that 512,000 people said they could not work in October, a record for the month. About 1.4 million people who normally hold full-time jobs said they could only work part-time because of the weather. This was also an all-time high for October and compared to just 129,000 last year.

The Bureau of Labor Statistics acknowledged that payroll employment estimates in some industries were likely affected by the hurricanes, but said “it is not possible to quantify the net effect on the month-over-month change in national employment estimates , hours or earnings, as the institution’s survey is not designed to isolate effects from extreme weather events.”

The response collection period, which can range from 10 to 16 days, is said to have lasted just 10 days in October and was completed a few days before the end of the month.

There was a concentration of job losses in industries that tend to employ hourly workers, a group that tends to be hardest hit by business closures due to weather disruptions.

The machine strikes at Boeing and Textron, an aircraft company, cut 44,000 jobs from the payroll for transportation equipment manufacturing. Workers who do not receive a salary during the survey period are counted as unemployed in the establishments survey. Some economists estimated that the storms, strikes and shorter collection period cut about 115,000 jobs from payrolls.

“The hurricanes clearly had a much bigger impact on employment last month than most economists had anticipated,” said Stephen Stanley, chief US economist at Santander US Capital Markets. “A lot of that should reverse in November.”

First-time jobless claims fell to a five-month low in late October after surging in the wake of the hurricanes.

SMALL MANUFACTURERS SALARY

Almost all of the jobs added last month were in the health and government sectors. Health care employment increased by 52,000 jobs across ambulatory care and nursing care. Government payrolls rose by 40,000, boosted by state and local government hiring.

Manufacturing employment fell by 46,000 jobs, also reflecting a loss of 6,000 jobs in the auto industry, a decline that was likely related to layoffs at Chrysler parent Stellantis. Separately, Boeing raised its wage offer for its striking workers, who will vote on the new package next week.

Professional and business services payrolls fell by 47,000 jobs, and employment in temporary help services fell by 49,000 jobs. Leisure and hospitality payrolls fell by 4,000, while retail employment fell by 6,400 jobs.

The share of industries reporting an increase in wages fell to 55.6 percent from 59.8 percent in September.

Average hourly earnings rose 0.4 percent last month after gaining 0.3 percent in September. These were likely picked up by hourly workers who opted out of payroll.

Wages rose 4.0% in the 12 months to October, after rising 3.9% in September. Strong wage growth underpins consumer spending and the economy as a whole.

Wall Street stocks traded higher. The dollar gained against a basket of currencies. US Treasury yields rose.

“JUSTIFICATION FOR DUCK REDUCTION”

Financial markets have fully priced in a 25 basis point cut by the Fed next Thursday. A rise in the unemployment rate to 4.3% in July from 3.8% in March was one of the catalysts for the US central bank’s unusually large half-percentage-point rate cut in September, the first reduction in borrowing costs since 2020 .

The Fed’s policy rate is now set in the range of 4.75%-5.00%, after being raised by 525 basis points in 2022 and 2023.

The survey of households, whose response rates according to the Bureau of Labor Statistics are within normal limits, showed that 220,000 people left the labor force in October, offsetting a 368,000 drop in employment.

Permanent layoffs rose by the most since November 2021, but fewer people suffered longer bouts of unemployment or worked part-time for economic reasons.

A broader measure of unemployment, which includes people who want to work but have given up looking and those working part-time because they can’t find a full-time job, was unchanged at 7.7% . The employment-to-population ratio, a measure of an economy’s ability to create jobs, fell to 60.0 percent from 60.2 percent in September.

“The labor market continues to cool gradually, giving the Fed justification to cut rates again at next week’s meeting and in December,” said Sam Williamson, senior economist at First American.