The U.S. labor market showed signs of cooling in October 2024, with employers adding just 12,000 jobs as hurricanes and major labor strikes disrupted hiring and payrolls across several industries.
The Labor Department’s employment report, released on November 1, was the final major economic report before the November 5 presidential election. Nonfarm payroll employment increased by only 12,000 during the month, the weakest monthly increase since December 2020, according to the U.S. Bureau of Labor Statistics. Economists surveyed by Reuters had expected an increase of about 113,000 jobs.
The weak October figure followed substantial downward revisions to employment growth in the previous two months. The Bureau of Labor Statistics revised August’s increase from 159,000 jobs to 78,000 and September’s gain from 254,000 to 223,000. Together, the revisions removed 112,000 jobs from previously reported employment growth.
Using the revised figures, the economy added an average of about 104,000 jobs per month from August through October. That was considerably below the average monthly increase of 194,000 recorded during the previous 12 months, according to the Bureau of Labor Statistics.
The unemployment rate remained unchanged at 4.1 percent in October. About 7 million Americans were unemployed, compared with 6.4 million people and an unemployment rate of 3.8 percent one year earlier, according to the Bureau of Labor Statistics.
The household survey used to calculate the unemployment rate showed a sharper decline in employment. The number of people classified as employed fell by 368,000 from September, while the civilian labor force declined by 220,000. The number of unemployed people increased by about 150,000, although the change was not large enough to move the rounded unemployment rate from 4.1 percent.
October’s numbers were heavily affected by Hurricanes Helene and Milton. According to a report by Reuters, 512,000 people with jobs said they were unable to work because of bad weather, the highest October figure on record. Another 1.4 million people who normally worked full time reported working only part time because of weather conditions.
The Bureau of Labor Statistics cautioned against trying to determine exactly how many payroll jobs were lost because of the hurricanes. The agency said employment estimates in some industries were likely affected by the storms, but its establishment survey was not designed to measure the precise national employment impact of extreme weather.
Labor strikes also had a significant effect on the October report. Manufacturing employment declined by 46,000 jobs, including a loss of 44,000 positions in transportation-equipment manufacturing. According to the Bureau of Labor Statistics, the decline in transportation equipment was largely the result of strike activity.
Tens of thousands of Boeing workers were on strike during the period covered by the employment survey, according to reports by Reuters and The Associated Press.
Professional and business services also weakened during the month. Employment in the sector declined by 47,000 jobs, while temporary help services lost approximately 49,000 positions, according to the Bureau of Labor Statistics.
Temporary employment is sometimes watched as an early indicator of changes in the labor market because companies may reduce temporary workers before cutting permanent employees or use temporary workers before expanding permanent hiring.
Other areas of the economy continued to add workers. Healthcare employment increased by 52,000 jobs in October, according to the Bureau of Labor Statistics. Ambulatory healthcare services added about 36,000 positions, while nursing and residential care facilities added approximately 9,000.
Government employment increased by another 40,000 jobs during the month, continuing a pattern of gains over the previous year.
Construction employment was little changed, increasing by about 8,000 jobs. Retail trade, transportation and warehousing, information, financial activities, and leisure and hospitality showed relatively little employment change during October.
Despite weaker hiring, wages continued to rise. Average hourly earnings for private-sector workers increased by 13 cents, or 0.4 percent, to $35.46 in October, according to the Bureau of Labor Statistics. Average hourly earnings were 4 percent higher than they had been one year earlier.
The combination of rising wages and relatively low unemployment provided evidence that the labor market remained on relatively solid footing despite slower hiring. According to a report by The Associated Press, economists generally viewed the labor market as cooling rather than experiencing a sudden collapse, particularly because layoffs and applications for unemployment benefits remained relatively low.
The October employment report also arrived as the Federal Reserve was beginning to lower interest rates following its aggressive campaign of rate increases.
The Federal Reserve lowered its benchmark federal funds target range by half a percentage point in September 2024, bringing the range to between 4.75 percent and 5 percent. The central bank said job gains had slowed and unemployment had risen but remained relatively low.
According to a report by Reuters following the October employment data, financial markets continued to expect the Federal Reserve to lower interest rates by another quarter percentage point at its November meeting. Investors generally viewed the unusually weak October payroll figure as being heavily distorted by hurricanes and labor strikes rather than as evidence of a sudden collapse in employment.
The downward revisions to August and September may have provided a clearer indication of the underlying labor-market trend. The revisions showed that employment growth had been weaker even before hurricanes and strikes disrupted October’s numbers.
According to a report by The Associated Press, economists viewed the revisions as further evidence that the U.S. labor market had been gradually cooling after several years of unusually strong hiring following the COVID-19 pandemic.
Overall, the October 2024 employment report presented a mixed picture. Payroll growth nearly stalled, manufacturing and professional services lost jobs, and previous months’ employment gains were revised substantially lower.
At the same time, unemployment remained at 4.1 percent, wages continued to rise, and healthcare and government employers continued adding workers.
The unusual effects of Hurricanes Helene and Milton and major labor strikes made the October payroll number particularly difficult to interpret. The more persistent warning sign was the downward revision of 112,000 jobs from August and September, suggesting that the slowdown in hiring had begun before those temporary disruptions occurred.
IMAGE: Rick Crowley / Wikimedia Commons (CC BY-SA 2.0)