U.S. Economy Added Only 12,000 Jobs—Why This Comes As No Surprise

The United States job market experienced a significant slowdown in October, with nonfarm payrolls increasing by only 12,000 positions, marking the weakest growth since December 2020, according to the latest data by the Bureau of Labor Statistics.

The unemployment rate remained steady at 4.1%, with the number of Americans without jobs holding relatively constant at 7 million. However, these figures reflect an increase in unemployment compared to the same time last year—3.8%.

The October employment summary not only revealed sluggish job growth but also included significant downward revisions for previous months. August's job gains were adjusted down to 78,000, and September's initial estimate was reduced to 223,000. These revisions collectively decreased the previously reported job creation figures by 112,000.

Employment in the healthcare and government sectors, typically bright spots for the economy, continued to rise in October. Healthcare added 52,000 jobs, consistent with its average monthly increase of 58,000 over the past year. Additionally, government employment also followed its upward trend, with an increase of 40,000 positions, close to the average monthly gain of 43,000 over the previous 12 months.

Within the professional and business services sector, temporary help services saw a major decline of 49,000 jobs. Since peaking in March 2022, employment in temporary help services has dropped by 577,000.

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Moreover, manufacturing employment fell by 46,000 jobs last month, primarily due to a decrease of 44,000 positions in transportation equipment manufacturing, largely attributed to strike activity, BLS noted.

In a mid-October speech, Federal Reserve Governor Christopher Waller, addressed the potential impact of recent events on the October jobs report. He noted that two major factors—recent hurricanes and the strike at Boeing—would significantly affect employment figures.

Waller estimated these events could reduce job growth by over 100,000 positions for the month. However, he emphasized that this substantial decrease in employment would likely be “temporary” rather than indicative of a lasting trend in the labor market.

Boeing Strike

When the Department of Labor conducted its household and establishment surveys, approximately 44,000 U.S. workers were on strike. The majority of these strikers—about 33,000—were Boeing machinists who had begun their work stoppage on September 13. This marked their first strike since 2008, following a decisive vote against a union-endorsed labor contract.

The striking workers are set to vote on a new contract proposal on Monday. This improved offer includes a 38% wage increase over a four-year period and an enhanced signing bonus. The union has endorsed this proposal, informing its members that they have negotiated the best possible terms from Boeing. The union leadership has indicated that they've reached the limit of concessions they could secure from the aircraft manufacturer, Reuters reported.

However, Boeing's influence on U.S. employment figures is expected to persist. CEO Kelly Ortberg recently announced plans to reduce the company's global workforce by 10%, equating to 17,000 positions.

Ortberg, who assumed the role of CEO in early August, has emphasized the need for Boeing to streamline its operations and concentrate on its core business activities.

“One of the things I’ve heard from a lot of employees is there’s just too much overhead. It slows them down in being able to get their work done,” he told investors on a third-quarter earnings call. “So we’re going to really focus this workforce reduction in streamlining those overhead activities, consolidating things that can be consolidated.”

Hurricanes Helene And Milton

The October data from the Labor Department surveys marked the first collection since Hurricanes Helene and Milton hit the U.S., causing extensive damage in the Southeast.

Economic analysts anticipated labor market challenges, including job losses and market distortions, as a result of the storms. Areas directly impacted by the hurricanes were expected to experience sharp increases in unemployment as businesses temporarily ceased operations due to physical damage or infrastructure failures.

Major disasters can have a profound impact on the job market, causing immediate unemployment, interrupting normal business activities and leading to widespread economic downturns across various sectors. The recovery from such devastating events typically requires substantial investment of both financial resources and time.