October Jobs Report Misses Big, Shaking Pre-Election Economic Narrative
In the final jobs report ahead of Tuesday’s pivotal US Presidential election, the American economy added a substantially lower-than-expected number of jobs in October.
In a critical jobs report just days before the presidential election, the US economy added a meager 12,000 jobs in October, falling significantly below the projected 113,000. This is the smallest job growth since December 2020 and well below what economists and analysts had expected. The news has stirred discussions on both sides of the political aisle, intensifying debates about the state of the US economy and what the figures might mean for election outcomes and future policy decisions.
The Bureau of Labor Statistics (BLS) revealed that October’s job growth was hindered by several one-off disruptions, including strikes and natural disasters, though the data reflects a general cooling trend. As the unemployment rate held steady at 4.1%, economists and policymakers now face questions about whether October’s weak performance was a temporary blip or a sign of deeper issues in the labor market.
Strikes and Storms Compound Employment Struggles
A combination of strikes and hurricanes muddied October’s labor data, complicating analysis for economists and investors alike. The strikes—primarily by Boeing workers and others in the aerospace sector—took a substantial toll on the month’s numbers, as approximately 41,400 workers were counted as temporarily unemployed due to halted production. This manufacturing slowdown led to a decline of 46,000 jobs in the sector, contributing significantly to the month’s overall weak performance.
Hurricanes Helene and Milton, which impacted the Southeast, also affected October’s employment figures. In some regions, companies struggled to conduct normal hiring operations and retain staff, though the BLS noted it was impossible to precisely measure the storms’ effects on national employment figures. The hurricanes forced businesses to pause operations and hampered employment surveys, which typically rely on in-person data collection.
Commenting on the complexities, Bill Adams, chief economist for Comerica Bank, remarked,
“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, but the downward revisions to job growth through September show it was cooling before these shocks struck.”
Mixed Sector Performances Reflect Economic Unease
October’s employment report showed highly uneven job gains across sectors. While healthcare saw an addition of 52,000 jobs, and government roles increased by 40,000, sectors such as professional and business services took a hit, shedding 47,000 positions. The construction industry added 8,000 jobs, but this was far below its 12-month average of 20,000 per month. The data points to a broader shift away from rapid hiring and suggests that employers are increasingly cautious amid economic uncertainty.
Manufacturing was especially hard-hit, with many Boeing employees still on strike as contract negotiations dragged on. This, combined with a shortage of temporary staff in professional services, painted a picture of an economy grappling with both structural and temporary setbacks. Some analysts believe the decline in temporary hiring reflects employers’ cautious outlook on economic conditions.
Mark Hamrick, a senior economic analyst with Bank Rate, explained the challenge in interpreting the numbers this month, stating:
“My biggest concern is the fact we had a noisy report that doesn’t give us a high degree of confidence of what the actual situation is. Some of the new jobless claims have simmered down, dissipating the impact of the Boeing strike, and that alone is significant as it’s one of the most important companies in our country.”
However, Julie Pollak, chief economist at Zip Recruiter doesn’t believe the October jobs report numbers were impacted by the strikers.
“The largest losses were in a sector not likely affected by the strikes. It was in professional business services and a decline in temporary hiring. It’s the largest in several months but not more than the last few years. We thought it would level off at some point, but the decline in temporary workers are those on the front lines. They’re the bellwether, so when conditions are weak in the economy, you get rid of them first,” said Pollak.
Pre-Election Tensions Rise Amid Economic Uncertainty
The report’s timing—just days ahead of a closely contested election—adds fuel to the fire as both presidential candidates vie for control of the economic narrative. Vice President Kamala Harris’s campaign has regularly highlighted the strength of the labor market under her leadership, citing 16 million new jobs since taking office. However, the latest numbers may complicate this messaging, as the October figures cast a shadow on recent economic achievements.
Trump campaign national press secretary Karoline Leavitt criticized the report, stating:
“This jobs report is a catastrophe and definitively reveals how badly Kamala Harris broke our economy. In a single month, Kamala’s failed economic agenda wiped out nearly 30,000 private sector jobs and nearly 50,000 manufacturing jobs. Working families are being ripped off by the Harris-Biden economic agenda. Kamala broke the economy. President Trump will fix it.”
Despite these criticisms, some analysts argue that the data may not sway undecided voters, many of whom have already made up their minds about the economic landscape. ZipRecruiter’s Julie Pollak believes the report’s timing will do little to alter voters’ views.
“People have made their minds up about this economy, but it would certainly have been a better argument for the Harris campaign if this was a blockbuster number,” noted Pollak.
Implications for Federal Reserve Policy
The weaker-than-expected jobs report has intensified speculation that the Federal Reserve will implement a 25-basis-point interest rate cut in its upcoming meeting. The Fed had already signaled a more accommodative stance after seeing signs of economic cooling, and this latest data only adds to the pressure for a rate reduction. Analysts widely expect a rate cut as the Fed aims to maintain economic stability amid the recent challenges.
Market reactions to the report have been relatively muted, with investors largely anticipating a Fed rate cut. US Treasury yields dropped, and the dollar index slid below 104.00, reflecting expectations for lower interest rates. Jeffrey Roach, the chief economist at LPL Financial, emphasized that “the Fed is in a tight spot” as it navigates economic data distorted by hurricanes and labor strikes. Roach predicts that the Fed will look beyond the October employment figures, focusing instead on longer-term trends.
In the weeks ahead, policymakers and economists will likely turn their attention to November’s employment report to determine whether October’s downturn was a fleeting setback or indicative of a more enduring slowdown. Given the complex dynamics of recent months, however, many experts advise caution in reading too much into a single month’s data.
Looking Forward
As the economy settles into a period of slower growth, many employers seem hesitant to make large hiring commitments, opting to hold steady until they have clearer visibility into the future. The upcoming election, combined with the Federal Reserve’s pending decisions, will likely shape the economic landscape for months to come.
In the immediate future, all eyes are on the November Federal Reserve meeting and next month’s employment report, both of which could provide clarity amid the current uncertainty. But for now, October’s jobs report has highlighted an undeniable reality: the labor market’s resilience is being tested, and the nation’s economic future remains a pivotal issue as voters head to the polls.
Stock Market Activity
With the worse-than-expected October jobs report boosting the odds for a Fed rate cut at its upcoming meeting, all three major US indices rose on Friday.
The S&P 500 Index (SPX), climbed 0.41% on Friday, closing the day at 5,728.80.
The Dow Jones Industrial Average (DOWI) closed Friday at 42,052.19, up 0.69%, while the NASDAQ Composite (NASX) finished the day up 0.80% at 18,239.92.
The SPDR SP 500 ETF Trust (NYSE Arca: SPY) rose 0.42%, closing the day at $571.04.
The Russell 2000 Small-Cap Index (RUT) closed Friday at 2,210.13, up 0.61%, while the Russell 2000 Ishares ETF (IWM), rose 0.56%, closing the day at $218.98.
The Russell Microcap Index (RUMIC) closed Friday’s trading session at 784.97, up 0.4%.
Join the Discussion in the WVC Facebook Investor Group
Have a Stock Tip or New Story Suggestion? Email us at Invest@WealthyVC.com
Disclaimer: Wealthy VC does not hold a position in any of the stocks, ETFs or cryptocurrencies mentioned in this article.
