Non-farm payrolls in October were far below expectations

The October non-farm payrolls report released by the U.S. Bureau of Labor Statistics (BLS) showed that the number of new jobs was only 12,000, a new low since 2020, far below the market expectation of 106,000. This data was affected by the strike of Boeing (BA) workers, which resulted in a decrease of 46,000 manufacturing jobs. In addition, hurricanes Helene and Milton in October also affected the response rate of the employment survey, further dragging down overall employment growth.

Unemployment rate remains stable and labor market pressure increases

The unemployment rate in October was 4.1%, the same as the previous month, but slightly higher than the actual unemployment rate of 4.05% in the previous month. The slight increase in the unemployment rate this time is closely related to the increase in layoffs. According to the report, the number of layoffs increased by 166,000 that month, and the number of people who lost their jobs again also increased by 108,000. The average unemployment period increased from 22.6 weeks in September to 22.9 weeks, showing that the pressure on the labor market is gradually increasing.

Negative growth in private employment

The labor force participation rate in October was 62.6%, lower than the market expectation of 62.7% and lower than 62.7% in the previous month. This change reflects the withdrawal of some labor force and the reduction of job search activities. In addition, although the overall employment has increased, after excluding the 40,000 new jobs in the government sector, the actual new employment in private enterprises is negative, a decrease of 28,000.

Manufacturing and other sectors

The manufacturing industry was hit by a double blow of strikes and hurricanes in October, and the number of new jobs fell by 46,000. In particular, the transportation equipment manufacturing industry lost 44,000 jobs due to the strike. In contrast, the healthcare industry maintained stable growth, with 52,000 new jobs, while the construction industry added 8,000 jobs, with a smaller change. In addition, the number of jobs in the temporary assistance service industry decreased by 49,000, and the cumulative decrease from the peak level in March 2022 has been 577,000.

Industry analysis

Economists generally believe that the weakness in the October employment report is not only due to natural disasters, but also reflects other signs of economic slowdown, and is not expected to change the Fed's plan to cut interest rates in November and December.

Christopher Rupkey, chief economist of FWDBONDS, said that the slowdown in employment growth does not mean that the economy is about to fall into recession, but that the market needs more data to assess economic trends.