A job recruitment sign outside a Stewart’s gas station in Catskill, New York, on Wednesday, October 2, 2024.
Angus Mordaunt | Bloomberg | Getty Images
This October could see a significant decline in nonfarm payroll numbers, largely due to the impacts of a formidable hurricane coupled with an extensive labor strike. Economists surveyed by Dow Jones anticipate that the Bureau of Labor Statistics will report a mere 100,000 job gains this month—a stark drop from September’s robust addition of 254,000 jobs and the lowest figure since December 2020.
Interestingly, the unemployment rate is expected to decline and remain steady at 4.1% when the data is released at 8:30 a.m. ET on Friday.
“Despite the anticipated reduction in payrolls, I believe unemployment will stay low, and wage growth will outpace inflation, indicating a resilient U.S. economy,” stated Michael Arone, Chief Investment Strategist at State Street Global Advisors.
Additionally, average hourly earnings are projected to rise by 0.3% for the month and 4% year-over-year, sustaining the same yearly growth rate as last month. This suggests that inflation is stabilizing rather than accelerating.
No matter the outcome, market analysts may take a cautious approach to this report, given the various extraordinary factors at play.
“While the overall numbers may appear inconsistent, they still provide a foundation to affirm that the economy is navigating a soft landing and remains fundamentally strong,” Arone added.
The hurricane’s financial ramifications could be unprecedented, while the strike at Boeing has led to the unemployment of 33,000 workers. According to Goldman Sachs, Hurricane Helen alone could account for the loss of up to 50,000 jobs—although Hurricane Milton’s impact is expected to be too late to influence October’s job figures. Furthermore, the Boeing strike might contribute to a drop of 41,000 jobs, leading Goldman to predict a total payroll increase of just 95,000.
Positive Indicators Persist
Despite the setbacks from the storm and strike, indications leading up to the employment report suggest a robust hiring environment and low layoffs.
This week, the payroll processing company ADP reported that private businesses added 233,000 new jobs in October, exceeding expectations, while initial jobless claims fell to 216,000, the lowest level since late April.
However, the White House estimates that the combined effects of these events could result in an overall payroll reduction of around 100,000. Jared Bernstein, Chairman of the Council of Economic Advisers, noted that “the disruptions will complicate this month’s jobs report more than usual.”
In the post-pandemic landscape, employment statistics have been quite variable.
Earlier in the year, the BLS announced a revision in statistics that reduced the number of job losses by 818,000 during the 12-month period ending March 2024, which resulted in a net decrease of 310,000 jobs compared to earlier estimates.
“This report reinforces the perception that employment remains on a growth trajectory, albeit a slower one,” declared Julia Pollack, Chief Economist at ZipRecruiter. “Growth is decelerating and appears concentrated in just a few sectors.”
Job creation sectors this year primarily include government, healthcare, and leisure and hospitality, with particular momentum in the medical industry. Pollack also noted a rise in demand in finance and insurance, in addition to skilled trades.
However, the overarching trend indicates a sluggish job market that may need Federal Reserve support through interest rate reductions to reverse the downturn.
“For the last two quarters, job growth has been below pre-pandemic levels, and the distribution of job gains has been notably concentrated,” Pollack emphasized. “This trend presents real challenges for job seekers and workers feeling left behind, many of whom are struggling to find suitable employment. It’s crucial to closely monitor the labor market,” she concluded.
