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Key Takeaways
- The U.S. economy added just 12,000 jobs in October, the fewest in more than three years, as hurricanes and strikes temporarily suppressed employment.
- Setting aside the statistical noise from the hurricanes, job creation was likely solid, but slowing, one economist said.
- Slowing job growth puts more pressure on the Federal Reserve to cut its benchmark interest rate, which could reduce borrowing costs on all kinds of loans.
Hurricanes Helene and Milton made a mess of the U.S. economy in October, pushing job creation down to its lowest level in more than three years.
U.S. employers added 12,000 jobs in October, down from 223,000 in September, the fewest since December 2020, the Bureau of Labor Statistics said Friday. That was well short of the 110,000 jobs that forecasters had expected, according to a survey of economists by Dow Jones Newswires and The Wall Street Journal. The unemployment rate held steady at 4.1%, which is not high by historical standards.
However, the massive job slowdown likely says little about the health of the economy. Economists had expected the storms in late September and October, as well as a strike at Boeing, to wreak havoc on job creation statistics since they temporarily threw many people out of work. The bureau could not definitively say how much the hurricanes impacted the statistics, the bureau said in its monthly news release.
The hurricanes and the strike likely subtracted 40,000 jobs each, meaning that underlying job growth was likely “slower but still reasonable,” Justin Wolfers, a professor of economics at the University of Michigan, estimated in a post on social media platform X.
Beneath the statistical noise caused by the hurricanes, there were signs that the job market truly is slowing down. The job growth figures for September and August were revised downward by a combined 112,000, making them significantly weaker than previously thought.
What Does The Job Report Mean For the Fed?
Signs of a job slowdown are especially significant for Federal Reserve officials, who meet next week to set the central bank’s fed funds rate which influences borrowing costs on all kinds of loans.
Fed officials cut the rate from a two-decade high at their last meeting in September, seeking to boost the economy and prevent a severe rise in unemployment. Slowing job growth could pressure the Fed to cut rates further in the coming months.
Financial markets widely expect the Fed to trim 0.25 basis points from its interest rate next week.