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    • US employers added just 12,000 jobs in October
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    US employers added just 12,000 jobs in October

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    Employers added just 12,000 jobs in October as hiring slowed substantially. The total was expected to be limited by two southeast hurricanes and several worker strikes, but the number was much smaller than expected and job gains from previous months were sharply revised downwards, raising concerns regarding the weakening of the labor market.

    The report provides a final portrait of the economy just days before next week’s historic election and key Federal Reserve meeting. But temporary obstacles will likely make it difficult for Fed officials to get a read on the health of the labor market, economists said.

    The unemployment rate held steady at 4.1 percent, the Labor Department said Friday.

    Before the report was released, economists polled by Bloomberg had expected 105,000 jobs to have been added in October.

    Also worrying: Wages gains for August and September were revised down by 112,000. August additions were downgraded from 159,000 to 78,000, and September additions from 254,000 to 223,000.

    How have hurricanes affected the economy?

    Hurricanes Helene and Milton likely cut about 70,000 jobs in the Southeast last month, Oxford Economics estimated. Goldman Sachs had expected a smaller impact of 40,000 to 50,000 jobs. Hurricane Helene hit Florida’s Gulf Coast on Sept. 26, well before the Labor Department conducted its jobs survey, the agency noted, but Milton hit during the week of the survey.

    Across the region, the number of businesses open, employees working and hours logged fell about 9 percent, according to Homebase, which makes employee scheduling software.

    Meanwhile, an ongoing strike at Boeing — along with smaller layoffs at Textron, an aerospace parts maker, and Hilton Hotels — likely suppressed wages by about 40,000, according to research firm Nomura.

    In total, the storms and strikes likely reduced job gains by about 100,000, forecasters estimated.

    There is no doubt that hurricanes and strikes have affected the number of lean jobs. About 512,000 people said they could not work because of the weather, compared with a historical average of 32,000, said economist Bradley Saunders of Capital Economics. And only 47% of companies surveyed responded, a 33-year low.

    However, he also mentioned a slowdown in the labor market.

    “The measly 12,000 nonfarm payrolls gain was much weaker than both we and the consensus expected,” Saunders said, adding that it was “only partially due to disruptions from the hurricanes and the Boeing strike.”

    He estimated that those temporary headwinds reduced wage gains by no more than 90,000, suggesting that without them employers would have added only 102,000 jobs. That’s well below the average of 148,000 in the previous three-month period, which was also hit by hurricanes, though less devastating.

    In which industries is employment growing?

    Healthcare led August’s weak job gains with 52,000, while government added 40,000. Other sectors lost jobs or added few. Professional and business services lost 47,000 as temporary staff positions fell. Manufacturing lost 46,000 jobs, mostly due to the Boeing strike. Leisure, hospitality and construction were basically smooth amid the storms.

    Do salaries increase or decrease?

    Average hourly wages rose 13 cents to $35.46, keeping annual growth at 4 percent.

    As the shortage of workers due to the pandemic has eased, wage increases have slowed. Economists said annual wage growth should slow to 3.5 percent to help meet the Federal Reserve’s 2 percent inflation target.

    This week, a separate barometer of wage growth that economists say is more accurate, called the labor cost index, showed that private sector wages rose 3.8 percent in the third quarter, the slowest pace in recent years three years.

    How much will the Fed cut interest rates?

    Because the effects of the storms are uncertain, Barclays said before the report that the Fed probably wouldn’t read too much into the unusually low October jobs figure.

    And despite concerns raised by the unusually weak jobs total about the health of the labor market, Saunders said the Fed would “look through the noise” and opt for a measured rate cut of a quarter of a point to a next week’s meeting, especially since other recent economic reports. were positive.

    In September, the Fed cut its key rate by a hefty half-percentage point — its first cut since 2020 — as inflation eased and job growth slowed sharply in August. The Fed cuts rates to juice lending activity and a weak economy, or rates return to normal as inflation declines. Fed officials have aggressively raised rates in 2022 and 2023 as inflation hit a 40-year high of 9.1 percent.

    In September, however, employers added more than 200,000 jobs. And data this week showed the economy expanded at a healthy 2.8 percent annual rate in the third quarter as consumers continued to spend. A sluggish economy and labor market could prompt the Fed to pause interest rate cuts to avoid rekindling inflation.

    Assuming the labor market continues to gradually cool, many forecasters believe the Fed will move forward with tentative plans to cut rates by a more modest quarter point in November, December and at every other meeting next year.

    How is the US job market right now?

    More broadly, job growth has been solid despite high interest rates and inflation as strong wage gains support consumption. A flood of immigrants filled jobs and further fueled spending.

    But the flow of immigrants that underpins labor force growth is slowing, Goldman Sachs said. At the same time, the government and health care sectors, which have supported U.S. job growth for months, finally strengthened their payrolls to close to where they would have been absent the pandemic, Goldman said. As a result, it now adds jobs more slowly.

    The result is expected to be a notable pullback in job creation next year at a pace that should help keep inflation contained while avoiding recession.

    This story has been updated to add new information.

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