Just days before the U.S. presidential election and Federal Reserve policy meeting, the government released a report showing a significant slowdown in the labor market. In October, the U.S. economy only added 12,000 jobs, falling far short of the 113,000 jobs forecasted by economists. Additionally, the job gain of 254,000 reported in September was revised down to 223,000. The unemployment rate for October remained at 4.1%, in line with expectations and the rate in September.
The Bureau of Labor Statistics noted that it was difficult to assess the impact of recent storms in the Southeast on the payroll data. This uncertainty adds another layer of complexity to understanding the current state of the economy. The revisions to the job gains in August and September indicate a broader trend of weakening job creation in recent months.
Despite the disappointing job numbers, there were some positive aspects in the report. Average hourly earnings increased by 0.4% in October, surpassing the 0.3% growth expected by analysts. Average weekly hours also showed strength at 34.3, slightly higher than the 34.2 hours forecasted. These metrics suggest that there are pockets of resilience in the labor market, even as overall job creation lags.
In the financial markets, reactions to the report were mixed. U.S. stock index futures maintained modest gains, while the 10-year Treasury yield dipped by four basis points to 4.25%. The U.S. dollar also saw a slight decrease of 0.1%. Interestingly, the price of gold remained near a record high at $2,767 per ounce, indicating ongoing uncertainty and volatility in the markets.
The report comes at a critical time, as market participants were anticipating the Federal Reserve to reduce its benchmark fed funds rate by 25 basis points at the upcoming policy meeting. The unexpected weakness in job creation could influence the Fed’s decision-making process and lead to further discussions on how to support the economy.
Overall, the October jobs report paints a mixed picture of the U.S. economy. While there are signs of strength in certain areas, the overall job growth remains sluggish. As the country navigates through a challenging economic environment, policymakers and market participants will closely monitor the data for insights into the future trajectory of the economy.
