| Key Points: – October saw a low 12,000 jobs added, largely due to strikes and weather impacts. – Unemployment remained at 4.1%, while wage growth rose to 4.1% year-over-year. – Fed rate cut likelihood increased to 99% following this report. |
The US labor market added only 12,000 jobs in October, significantly below the anticipated 100,000, according to the Bureau of Labor Statistics (BLS). This marked a sharp slowdown from September’s revised 223,000 job gain and reflected several temporary pressures, including a Boeing worker strike and recent hurricanes. However, the unemployment rate held steady at 4.1%, as the BLS noted that different data collection methods account for the varying indicators.
Manufacturing saw the biggest impact, with a 46,000 job decline largely attributed to the strike, while weather disruptions affected employment across multiple industries. Wage growth, a critical measure for inflation, rose to 4.1% on an annual basis, up from September’s 4%. On a monthly basis, wages grew 0.4%, also slightly above expectations. Labor force participation slipped to 62.6%, down from 62.7% the previous month.
This jobs report also comes as a pivotal data point for the Federal Reserve’s upcoming decision on interest rates, scheduled for Nov. 7. Market predictions now put a 99% likelihood on a 25-basis-point rate cut, up from a 95% chance before the report’s release. However, the Fed may focus on broader trends showing the labor market’s gradual cooling beyond these temporary effects. Recent BLS data from September also indicated declining job openings and a reduced quits rate, signaling lower worker confidence and easing hiring pressures.
Economists believe the October job numbers, while unusually low, reflect temporary factors rather than underlying economic weakness. Joe Brusuelas, chief economist at RSM, suggested ignoring the low job addition figure and focusing on the consistent 4.1% unemployment rate as a more stable indicator of labor market conditions. Carson Group’s global macro strategist, Sonu Varghese, noted that this cooling labor market trend aligns with the Fed’s interest rate cut trajectory for November and December.