US economy added 12,000 jobs in October, well below economists’ expectations

U.S. job growth slowed down in October, coming in well short of economists’ expectations, while the unemployment rate was unchanged. 

The Labor Department on Friday reported that employers added 12,000 jobs in October, well below the 113,000 gain that was predicted by LSEG economists and the lowest tally since December 2020.

The unemployment rate was 4.1%, in line with expectations.

The number of jobs added in the prior two months were both revised downward, with job creation in August revised down by 81,000 from a gain of 159,000 to 78,000, while September was revised down by 31,000 from a gain of 254,000 to 223,000.

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Private sector payrolls contracted by 28,000 in October after LSEG economists projected they would rise by 90,000.

The manufacturing sector saw employment decline by 46,000 jobs in October, which the Bureau of Labor Statistics (BLS) noted was largely due to strike activity in the transportation equipment manufacturing sector. About 33,000 unionized machinists at Boeing have been on strike since early September.

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The construction sector added 8,000 jobs — below the average of 20,000 jobs per month in the past 12 months.

Health care added 52,300 jobs in October, near its average monthly gain of 58,000 in the last year.

The government added 40,000 jobs in October, mostly in line with its average monthly gain of 43,000 over the past 12 months. 

The BLS noted that Hurricane Helene made landfall in the southeast before the reference period for its employment surveys, while Hurricane Milton hit the same region during the report period. 

The agency noted that it made no changes to the October report due to the hurricanes, explaining 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.”

US ECONOMY GREW 2.8% IN THE THIRD QUARTER, SLOWER THAN EXPECTED

The labor force participation rate was 62.6% in October, down slightly from 62.7% a month ago and has changed little over the course of the last year.

Average hourly earnings for all employees on private nonfarm payrolls rose by 13 cents, or 0.4%, to $35.46 in October. Over the past 12 months, average hourly earnings have increased by 4%.

The number of permanently unemployed people increased to 1.8 million in October, while the number of people on temporary layoff was little changed at 846,000.

The number of people who are considered to be long-term unemployed, defined as being jobless for 27 weeks or more, was little changed at 1.6 million in October and up from 1.3 million a year ago. The long-term unemployed account for 22.9% of all unemployed people.

“As expected, the October jobs report shows a big impact from Hurricanes Milton and Helene,” said Bill Adams, chief economist for Comerica Bank. “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.”

The jobs data comes as the Federal Reserve is set to meet next week, with markets expecting policymakers will announce a 25-basis-point cut to interest rates.