Friday’s jobs report expected to show slowest pace of hiring in years

Powerful hurricanes and a major labor strike could reduce a portion of the nonfarm payroll count for October, which is expected to be the slowest month for job creation in nearly four years.

Economists surveyed by Dow Jones expect the Bureau of Labor Statistics to report Friday that payrolls rose by just 100,000 for the month, slowed by hurricanes Helene and Milton, as well as the strike at Boeing. If their prediction is accurate, it would be the lowest employment total since December 2020 and a big drop from September’s 254,000.

However, the report, which will be released at 8:30 a.m. ET, is also expected to indicate that the unemployment rate will remain unchanged at 4.1%.

“When we look through that [headline jobs number]”The unemployment rate will remain low and I think wages will grow faster than inflation, both of which are going to underscore the health of the U.S. economy,” said Michael Arone, chief investment strategist at State Street Global Advisors.

Regarding salaries, average hourly earnings are expected to increase 0.3% for the month and 4% compared to the previous year, with the annual figure being the same as in September and furthering the narrative that inflation is Stiff but does not accelerate.

Whatever the results, markets may choose to revise the report, since so many one-off visits slowed trading.

“The top-line numbers will be a little noisy, but I think there will be enough to continue to determine that the soft landing is intact and that the US economy remains in good shape,” Arone added.

The hurricanes caused what could be historic levels of monetary damage, while the Boeing strike has sidelined 33,000 workers.

Goldman Sachs estimates that Helene cut up to 50,000 positions from the payroll count, although Hurricane Milton probably arrived too late to affect the October count. Meanwhile, the Boeing strike could reduce the total by 41,000, added Goldman, which forecasts total payroll growth of 95,000.

However, indicators leading up to the much-watched jobs report show that hiring has continued apace and layoffs are low, despite the damage caused by the storms and strikes.

Payroll processing company ADP reported this week that private companies hired 233,000 new workers in October, well above expectations, while initial jobless claims fell to 216,000, matching the lowest level since late April.

Still, the White House estimates that cumulative developments could affect the payroll count by up to 100,000. The “disruptions will make interpretation of this month’s jobs report more difficult than usual,” Jared Bernstein, president of the Council of Economic Advisers, said Wednesday.

Overall employment figures have been noisy in the post-Covid era.

Earlier this year, the BLS announced benchmark revisions that removed 818,000 from previous counts in the 12-month period through March 2024. So far this year through July, the revisions have removed a net 310,000 from counts. initial estimates.

“This report will reinforce the big picture, which is that the labor market continues to grow. But the fact is that it is growing but slowing,” said Julia Pollak, chief economist at ZipRecruiter. “Growth is slowing and is also becoming increasingly concentrated in just a couple of sectors.”

The top areas of job creation this year have been government, healthcare, and leisure and hospitality. Pollak said that remains the case, particularly for healthcare, while ZipRecruiter has also seen increased interest in skilled trades along with finance and related businesses, such as insurance.

However, he said the overall picture is of a slowing market that will need some help from the Federal Reserve’s interest rate cuts to arrest the slide.

“Over the past two quarters, job growth has been below the pre-pandemic average, and job gains have been unusually narrowly distributed,” Pollak said. “That has real effects on job seekers and workers who felt their influence eroded, and many of them are struggling to find acceptable jobs. So I think the Fed’s attention should be firmly on the labor market.” “.