US adds only 12,000 jobs amid worst report of Biden’s term due to hurricanes and attacks

The U.S. economy added just 12,000 new jobs in October, the weakest jobs report yet for the Biden administration, but the numbers were closely watched due to hurricanes and the Boeing Co. attack. That’s because it was a big blow.

Friday’s statistics were released by the Bureau of Labor Statistics just four days before the U.S. presidential election and were controlled by the Trump campaign. However, the Biden administration insisted that the underlying data, particularly the unemployment rate, remained strong.

“This employment report is a disaster and makes definitively clear just how bad the situation is.” [vice-president and Democratic nominee] Kamala Harris has destroyed our economy,” the Trump campaign said.

President Joe Biden said “we expect job growth to pick up in November” as hurricane recovery and rebuilding efforts continue.

October’s labor market numbers were well below the average forecast of 100,000 new jobs in a Bloomberg survey of economists, and well below September’s downwardly revised figure of 223,000 new jobs. There wasn’t.

But in a sign of the fundamental health of the U.S. labor market, the unemployment rate remained at 4.1%.

“The labor market is still struggling to find its footing,” said Sarah House, senior economist at Wells Fargo, noting not only the impact of the hurricanes and strikes but also the “fairly weak” revised readings. For the past two months.

“The job market is still strong, but it’s no longer overheated,” he added.

The latest data has strengthened market expectations that the Federal Reserve will cut interest rates by a quarter of a percentage point next week. Before the data was released, futures traders were pricing in the possibility of a slight rise in interest rates at Thursday’s central bank meeting.

Ajay Rajadhyaksha, Barclays’ global research chairman, added that the market sees a 0.25% interest rate cut in December as “a certainty” following the release of the October jobs report. .

U.S. Treasury yields initially fell from three-month highs shortly after the news, reflecting lower interest rate expectations, but the move rebounded.

The yield on two-year US Treasury bonds, which is sensitive to policy, moved in the opposite direction to prices and fell after the payroll statistics were released, but rebounded slightly on the day to trade at 4.18%.

U.S. stocks rose on Friday, with the S&P 500 up 0.8% and the tech-heavy Nasdaq Composite Index up 1.1%.

“We were definitely expecting the employment report to be softer than last month due to the distortions caused by the hurricanes and strikes,” said Mark Kavanagh, head of U.S. rates strategy at Bank of America.

But he added, “The economy has softened more than economists expected, though, and appears to be consistent with a softening in the broader labor market.”

The October employment report was collected the week Hurricane Milton made landfall in Florida and shortly after Hurricane Helen hit the southeastern United States.

The continuing strike at Boeing, with 33,000 employees out of work, also pushed down the numbers.

The BLS said the hurricanes affected employment growth, but said it was “impossible to quantify the ultimate impact” on changes in monthly employment, hours worked, and wage increases. He added that survey responses to employment statistics were “well below average.”

Many economists expected the storm alone to reduce positions by about 40,000 positions.

Manufacturing employment fell by 46,000 jobs in October, mostly in the transportation equipment sector, which was directly affected by the strike.

Construction, retail, leisure and services, and finance also all saw little or no job growth.

Overall, private sector employment growth fell by 28,000 jobs.

In a further sign of a cooling labor market, employment growth for August was revised downward by 81,000 to 78,000 net jobs. Combined with September’s downward revision, the U.S. economy created 112,000 fewer jobs in the past two months than previously reported.

As inflation has slowed in recent months, the Fed has increasingly focused on protecting the labor market.

To achieve a “soft landing” in which inflation returns to the Fed’s 2% goal without triggering a recession, officials are trying to lower interest rates to a “neutral” level that does not stunt growth.

David Kelly, chief global strategist at JPMorgan Asset Management, said despite Friday’s statistics, such an outcome remains likely.

“I don’t want to overestimate the importance of this report. . . . We had particular difficulty in crunching the numbers this time,” he said.

“There are a few holes in this part of the runway, but it’s basically a soft landing.”

Policymakers and economists say they expect the downward skew in October’s payrolls to disappear over time due to strikes and hurricanes.

Robert Tipp, head of global fixed income and chief investment strategist at PGIM Fixed Income, said Friday’s job numbers “remain consistent with the Fed’s tradition of reducing restraints and cutting rates cautiously to ensure a soft landing. “The market firmly returned to its policy.” ”

“[A] “A soft landing remains the base case, but the market will continue to be traumatized month after month as the data continues to get stronger and weaker,” Tipp said.