The US economy has been dealt an ‘October surprise’ less than a week before the presidential election.
Job creation last month slowed to its weakest pace since December 2020, a shock jobs report revealed Friday.
Employers added an estimated 12,000 jobs in October, missing estimates of a 100,000-job gain by a huge margin, and sparking fears of underlying weakness in the economy.
A so-called ‘October surprise’ refers to an event which could influence the outcome of an upcoming November election.
Although Vice President Kamala Harris and former president Donald Trump appear to be neck-and-neck, the economy is at the forefront of voters’ minds.
The weak jobs number for October ‘casts a murky shadow heading into next week,’ Lisa Sturtevant, chief economist at Bright MLS, said.
The ongoing Boeing strike and the devastating impact of hurricanes Helene and Milton had an impact on the figures, the Bureau of Labor Statistics said.
The unemployment rate stayed steady at 4.1 percent, however, in line with economists expectations.
President gives statement on jobs numbers
‘In October, unemployment was unchanged at 4.1 percent, but the devastation from Hurricanes Helene and Milton, and new strike activity, lowered job growth,’ Joe Biden said in a statement.
‘Job growth is expected to rebound in November as our hurricane recovery and rebuilding efforts continue.’
‘America’s economy remains strong, with 16 million jobs created since I took office, including an average 180,000 jobs created each month over the last year – more than the year before the pandemic,’ the statement added.
‘We have the lowest average unemployment rate of any administration in 50 years, our economy has grown more than any presidential term this century, incomes are up $4,000 over prices, and inflation has fallen nearly to its 2 percent target.’
Numbers are a ‘catastrophe’, says Trump
‘This jobs report is a catastrophe and definitively reveals how badly Kamala Harris broke our economy,’ Donald Trump’s campaign said in a statement.
‘In a single month, Kamala’s failed economic agenda wiped out nearly 30,000 private sector jobs and nearly 50,000 manufacturing jobs,’ said Karoline Leavitt, Trump Campaign National Press Secretary.
‘Working families are being ripped off by the Harris-Biden economic agenda. Kamala broke the economy. President Trump will fix it.’
Should this raise alarm bells?
‘In spite of the weak headline number, today’s report shouldn’t raise alarm bells for job seekers, workers, or policymakers yet – especially if the hurricane and strike impacts prove temporary,’ said Cory Stahle, an economist at the Indeed Hiring Lab.
He said it would be real cause for concern if future reports are similarly weak, with limited job gains and persistent downward revisions to prior data.
‘But for now, a soft landing is still on the table, though it will require stronger job gains and steady unemployment in the coming months,’ he added.
‘For policymakers, this report is not likely to shift plans too much, but we can probably expect to see more interest rate cuts and support for the labor market on the horizon.’
Monthly average down
Following the data revisions released Friday, the average job growth over the last three months has fallen to 104,000.
This is down from 189,000 over the six months before that, according to the Labor Department.
Beneath the noise, the numbers still point to a ‘fundamentally slowing labor market,’ Seema Shah, chief global strategist at Principal Asset Management, told The New York Times.
Presidential election on the horizon
The figures come with less than a week until the presidential election – with the economy at the forefront of voters’ minds.
The weak jobs number for October ‘casts a murky shadow heading into next week,’ Lisa Sturtevant, chief economist at Bright MLS, told CNBC.
The report is the last major piece of economic data which will be released ahead of the election.
Downward revisions on prior months
The weak October jobs report also included downward revisions on data from prior months.
Job gains in August was cut to 78,000, while September’s figure decreased to 223,000.
Together, the revisions cut job creation totals by 112,000.
Stock markets up
Wall Street largely ignored the data before the bell, with stock market futures up.
‘Markets are rightly avoiding an overreaction,’ Kyle Chapman, an analyst at Ballinger Group, told The New York Times.
The below-expectation jobs numbers upped expectations that the Federal Reserve would cut interest rates again at its next meeting next week.
Investors now see over a 99 percent chance of a 25 basis points cut, according to the CME FedWatch tool.
Impact of strikes and storms
The report from the Bureau of Labor Statistics said the Boeing strike likely subtracted 44,000 jobs in the manufacturing sector, which lost 46,000 positions in total.
Some 33,000 union members have been on strike since September 13, which has dealt a damaging blow to the aerospace manufacturer.
It also noted that devastating hurricanes Helene and Milton, which hit large swathes of the country last month, would have had an effect on the jobs numbers.
However it said ‘it is not possible to quantify the net effect’ of the storms on the jobs total.
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Shock ‘October surprise’ for American economy just days before the election
With only four days to go until Tuesday’s presidential election, the poor jobs figures could not have come at a worse time for Kamala Harris.To be sure, there
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The economy will be at the forefront of many voters’ minds on Election Day, as Vice President Kamala Harris emphasizes the Biden administration's stro
Jobs growth in the US slowed sharply in October as hurricanes and strikes disrupted the economy.Employers added 12,000 jobs last month, much lower than the 223,