US adds just 12,000 jobs as storms and strikes produce worst report of Biden’s term
The US economy added just 12,000 new jobs in October, the Biden administration’s weakest jobs report to date, as the closely watched number was hit hard by hurricanes and the coronavirus pandemic. Boeing strike.
Friday’s numbers, released by the Bureau of Labor Statistics just four days before the US election, were captured by the Trump campaign. However, the Biden administration argues that the underlying data – especially on the unemployment rate – remains strong.
“This jobs report is a disaster and clearly shows how bad things are [vice-president and Democratic nominee] Kamala Harris broke our economy,” the Trump campaign said.
President Joe Biden said as recovery and reconstruction efforts from the storm continue, “job growth is expected to rebound in November.”
October labor market figures were much lower than the median forecast of 100,000 job rose in a Bloomberg poll of economists and did not exceed September’s downwardly revised figure of 223,000 new jobs.
But in a sign of the underlying health of the US labor market, the unemployment rate remained at 4.1%.
“We still see a labor market that is struggling to find its footing,” said Sarah House, senior economist at Wells Fargo. in the previous two months.
“The job market is still strong but it’s not too hot anymore,” she added.
The latest data reinforces market expectations of a quarter point Federal Reserve interest rate cut next week. Before the data was released, futures traders had predicted a low probability of interest rates being held at the central bank’s meeting on Thursday.
Ajay Rajadhyaksha, president of global research at Barclays, added that, following the release of the October jobs figures, the market which has now seen a 0.25 percent decline in December is “certain to happen”.
US government bond yields fell from three-month highs immediately after the report, reflecting expectations of falling interest rates.
Yields on policy-sensitive 2-year Treasury bonds move inversely to prices, initially falling after the payroll data was released before rebounding to trade at 4.16%, slightly change during the day.
U.S. stocks rallied on Friday, with the S&P 500 up 1.1% and the tech-heavy Nasdaq Composite up 1.2%.
“We expect the jobs report to be certainly weaker than in previous months, just due to fluctuations from hurricanes and strikes,” said Mark Cabana, head of U.S. rates strategy at Bank of America. cause”.
But he added: “That said, it was softer than our economists expected – and it appears to be consistent with the overall weakening of the labor market.”
October employment data was collected during the week that Hurricane Milton made landfall in Florida and immediately after Hurricane Helene made landfall in the southeastern United States.
The ongoing strike at Boeing, causing 33,000 employees to stop working, also pulled this number down.
The BLS said the storms impacted job growth but said it was “impossible to quantify the true impact” on monthly changes in employment, hours worked or wage increases. It added that survey responses were “below average” for the jobs report.
Many economists expect about 40,000 jobs to be affected from the storms alone.
Manufacturing employment fell by 46,000 jobs in October, the majority of which were related to the transportation equipment sector, which was directly affected by the strikes.
The construction, retail, entertainment, hospitality and financial sectors all recorded little or no job growth.
Overall, private sector job growth fell by 28,000 positions.
In a further sign that the labor market is cooling, August job growth was revised down from 81,000 to 78,000 net jobs. Combined with September’s downward revision, that means that over the two-month period, the US economy created 112,000 fewer jobs than previously reported.
As inflation has slowed in recent months, the Fed has increasingly focused on protecting the labor market.
In an effort to achieve a “soft landing,” in which inflation returns to the Fed’s 2% target without triggering a recession, officials are trying to lower interest rates to a “neutral” level to avoid hinder growth.
David Kelly, chief global strategist at JPMorgan Asset Management, said such an outcome was still possible despite Friday’s figures.
“I would not overestimate the importance of this report. . . This time there are particular difficulties in calculating the numbers,” he said.
“There were a few potholes on this part of the runway, but it was basically a soft landing.”
Policymakers and economists have signaled that they expect the downward distortion in October payroll figures to fade from the impact of the strike and storms over time.