What’s Behind the Drastic Slowdown in U.S. Job Growth for October 2024?

images of ben franklin and the statue of liberty behind a graph indicating economic downturn

The U.S. job market falters with only 12,000 jobs added in October 2024 amidst manufacturing declines and hurricane impacts.

At a Glance

October added 12,000 jobs, far below the expected 113,000.
Unemployment rate remains steady at 4.1% despite job market challenges.
Manufacturing sector lost 46,000 jobs, primarily due to strikes.
Hurricanes Helene and Milton disrupted labor markets, particularly in leisure and hospitality sectors.
Average hourly earnings rose by 0.4% in the month.

Job Additions and Sector Declines

In October 2024, the U.S. job market saw a significant slowdown with employers adding only 12,000 jobs. This number is a sharp contrast to the anticipated 113,000, attributed to major disruptions like ongoing strikes and recent hurricanes. The manufacturing sector experienced a decline, losing 46,000 jobs, exacerbated by strikes in transportation equipment manufacturing such as Boeing.

Despite these challenges, the unemployment rate held steady at 4.1%, signaling a complex labor market landscape. Private sector payrolls also decreased by 28,000, against an expected increase, highlighting significant weaknesses in certain critical economic sectors.

US job growth likely slowed sharply in October amid disruptions from hurricanes and strikes by aerospace factory workers, but a steady unemployment rate should offer assurance that the labor market remained on solid footing ahead of Tuesday's election https://t.co/uQ3B2SXsqO

— Reuters (@Reuters) November 1, 2024

Impact of Extreme Weather

October’s jobs report reflected the significant effect of Hurricanes Helene and Milton, especially in sectors like leisure and hospitality. The Bureau of Labor Statistics noted the difficulty in isolating the hurricane’s impact on employment figures, further muddying the labor market picture. Additionally, issues in the survey’s design obscure a clear understanding of these weather events’ net effects on national employment changes.

The BLS noted that “it is likely that payroll employment estimates in some industries were affected by the hurricanes; however, it is not possible to quantify the net effect on the over-the-month change in national employment, hours, or earnings estimates because the establishment survey is not designed to isolate effects from extreme weather events.”

These disruptions did not impede an increase in average hourly earnings, which grew by 0.4% in October. However, the impact on overall employment casts uncertainty on ongoing job market trends.

Political and Economic Repercussions

This underwhelming jobs report became a significant political topic as the elections approached, sparking differing interpretations. The Biden administration attributed the weak job numbers to disruptions they deemed temporary. Conversely, the Trump campaign criticized the current economic management, highlighting the need for robust policies.

Meanwhile, stock markets moved higher slightly as anticipation of further interest rate cuts emerged. The Federal Reserve’s potential monetary policy adjustments in response to these economic indicators remain a focal point for analysts and investors.

Job growth slowed in October as the economy settles into a new normal https://t.co/BLZE5I8FCC

— Markets Insider (@MktsInsider) November 3, 2023

Broader Implications and Future Outlook

Revisions in August and September’s job figures indicated a softer labor market, cutting down about 112,000 jobs from previous estimates. This cools prior assumptions about employment strength as the year progressed. Temporary help services continued a downward trend as these sectors strive to adjust amidst broader economic challenges.

“The big one-off shocks that struck the economy in October make it impossible to know whether the job market was changing direction in the month,” said Bill Adams, chief economist at Comerica Bank. “But the downward revisions to job growth through September show it was cooling before these shocks struck.”

While consumer spending remains a robust driver of economic growth, signs of a slowing job market affect future outlooks. The current economic trajectory, affected heavily by external factors and policy decisions, underscores the importance of vigilant economic management in maintaining national prosperity.