Job creation stalled in October, a month battered by strikes and hurricanes, presenting an unclear picture of where the labor market was headed even as overall economic growth remained impressive.
Employers added only 12,000 jobs on a seasonally adjusted basis, the Labor Department reported on Friday, substantially fewer than economists had forecast. The unemployment rate, based on a survey of households, remained 4.1 percent.
The report is the last before a presidential election in which polls have consistently found the economy to be a top issue for voters, and the low figure supplied a talking point for Republicans. It also strengthened the case for another interest rate cut when Federal Reserve policymakers meet next week.
“It’s hard to say, ‘This was a strong report if it were not for the strikes and hurricanes,’” said Oliver Allen, a senior U.S. economist at Pantheon Macroeconomics. “If the numbers still look like that next month, and we have another step down in revisions, it’s a pretty weak set of prints.”
Gains for August and September were revised downward, bringing the three-month average to 104,000 — down from 189,000 over the six months before that.
Markets took the muddled data in stride, but the political reaction was fierce, with former President Donald J. Trump’s campaign saying that the report was “a catastrophe and definitively reveals how badly Kamala Harris broke our economy.”
The White House shot back, with Jared Bernstein, the chairman of the Council of Economic Advisers, calling the slowdown an anomaly. “Anyone who is ignoring the noise in this report has a political agenda, not an economic one,” he said.
The effect from a strike at Boeing, which began in mid-September and put about 35,000 workers on the picket lines, was fairly clear: Transportation equipment manufacturing outside automobiles dropped by 38,000 jobs, which probably reflects furloughs among other Boeing workers and those of its suppliers, as well as the striking workers.
Businesses around the idled Boeing plants, like auto body shops and fast food places in Renton, Wash., are suffering as well. “Anything that’s discretionary for spending is getting annihilated right now,” said Diane Dobson, chief executive of the Greater Renton Chamber of Commerce. “There are some that rely largely on Boeing that are speaking about potentially closing their doors.”
The more difficult factor to assess is the effect of Hurricanes Milton and Helene, which each cut a wide path of destruction across the Southeast in recent weeks. Leisure and hospitality hiring was essentially flat, after strong growth in previous months, suggesting that the disasters had shuttered many restaurants and entertainment venues. But an unusually low survey response rate probably also clouded reality on the ground.
The storms’ fingerprints may also be visible on average hourly earnings, which grew 0.4 percent over the month, or 4 percent from a year ago. That measure of wages is subject to changes in the composition of employment, so the loss of lower-paid hourly workers during weather disruptions could have raised it slightly; another income measure shows steady cooling.
And temporary help services, which have been shrinking for two and a half years, lost 48,500 jobs — possibly because contract workers would be the first to be cut loose during a disaster, or simply not hired as they otherwise would have been.
What had been a hot job market in and around Asheville, N.C., might take a while to heal, noted Nathan Ramsey, director of the Mountain Area Workforce Development Board in western North Carolina. Helene hit the region during its peak fall tourism season, and with the water system still in shambles, its breweries, hotels and eateries are unable to open.
“We could see our unemployment rate going to 10 percent or more based on these numbers, and the damage isn’t over as more layoffs are anticipated,” Mr. Ramsey said. A big concern is the loss of housing, which could push local residents to relocate — even if rebuilding creates more jobs in construction down the road.
Two sectors responsible for most of the growth over the past year, health care and government, made up for the losses, with poll workers possibly adding to public payrolls. But if such sluggishness continues, the economy will struggle to soak up the number of people who enter the work force each month.
Looking through recent disruptions, the bigger data picture is of a labor market with very little movement. Employers aren’t posting many positions, and hiring remains depressed. That creates a challenge for anyone looking for work: The share of unemployed workers who find jobs has been declining, and the average duration of unemployment has been increasing.
But relatively few people are being laid off or quitting, and economic growth remains energetic, largely on account of muscular consumer spending. Measures of consumer confidence have been rebounding, as inflation has sunk near historically normal levels.
Selma Hepp, chief economist at the real estate data firm CoreLogic, helped oversee a recent survey of members of the National Association for Business Economics that showed an overall sense of optimism.
“They’re planning to continue to hold on to talent, and I think a lot of that has to do with how difficult it was to find talent,” Dr. Hepp said. “Uncertainty is there, but when you look at corporate performance, there’s no reason to lay off people.”
That’s how Elaine Read is feeling. She runs a boutique chocolate maker in Atlanta called Xocolatl, and says her sales have been running well above previous years, giving her confidence to hire plenty of seasonal employees heading into the crucial holiday season. At the same time, finding workers has been less challenging as the intensely competitive labor market of 2022 and early 2023 has eased.
“When we were in our hiring crunch, I think there were a lot of people assessing what they wanted to do with work,” Ms. Read said. “Slightly more than a year ago is when we started seeing candidates who were a lot more enthusiastic and good enough fits for what we were hiring for.”
What Ms. Read may be sensing is the growth in the labor force over the past few years, which has been fueled by a few factors. A wave of immigrants has added millions of willing hands. And pay increases have drawn many people off the sidelines — particularly women, whose participation in the labor force has set records as new standards for work flexibility have made it easier to juggle responsibilities at home and on the job.
That trend may have run its course for now. Labor force participation for people in their prime working years — ages 25 to 54 — has fallen for two months. Slackening wage growth could be one reason. The availability of child care could be another: Employment growth in that industry has flattened in the last six months, after federal aid from Covid relief bills expired, while prices for child care and school tuition have spiked.
Even if such pressure doesn’t pull people out of the workplace entirely, it could lead them to work fewer hours. The average workweek, which spiked during the pandemic, is now slightly shorter than it was in 2019.
Kayla Lengyel, who works for the Utah state government and lives outside Salt Lake City, made that choice a couple months ago. She already pays for day care for her 2-year-old and thought she could save money when her 5-year-old enters kindergarten. But finding care after school for random holidays and every time one child got sick meant it was still going to be expensive.
That’s why she decided to go part time, forgoing a substantial chunk of her salary.
“So many people want to work,” Ms. Lengyel said. “They want to keep their skills up and be involved in their industry. But they feel they can’t work full time, or it’s just not worth working full time, when child care costs what it does.”
Ultimately, if the labor market appears to be taking a real turn for the worse, the Federal Reserve may step in to cut interest rates more sharply. Lending standards have already been loosening, which could give employers more confidence to invest, once uncertainty from the election has resolved.
“It might be too early to see that,” said Andrew Husby, a senior U.S. economist at BNP Paribas, “but what we’ve seen over the last year could be promoting a bit more growth.”
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