US adds just 12,000 jobs as hurricanes and strikes produce worst update of Biden’s term

The US economy added just 12,000 recent positions in October, in by far the weakest jobs update of the Biden administration, as the closely watched number was hit challenging by hurricanes and the Boeing strike.

Friday’s figure, published by the Bureau of Labor Statistics just four days before the US election, was seized upon by the Trump campaign. However the Biden administration argued that the underlying data — notably on unemployment — remained powerful.

“This jobs update is a catastrophe and definitively reveals how badly [vice-president and Democratic nominee] Kamala Harris broke our economy,” the Trump campaign said.

President Joe Biden said that as hurricane recovery and rebuilding efforts continued, “job growth is expected to rebound in November”.

October’s labour trade figure was far below the average projection of 100,000 job gains in a poll of economists by Bloomberg and well short of September’s downwardly revised figure of 223,000 recent jobs.

But in a sign of the underlying strength of the US labour trade, the unemployment rate remained 4.1 per cent.

“We’re still seeing a labour trade that’s struggling to discover its footing,” said Sarah House, elder economist at Wells Fargo, who referred not just to the impact of the hurricanes and the strike but also to the “pretty frail” revised figures for the previous two months.

“The jobs trade is still powerful but it’s not overheated any more either,” she added.

The latest data cemented trade expectations of a quarter point Federal safety net rate cut next week. Before the figures were published, forward contracts traders had priced in a tiny chance rates would be held at the central lender’s conference on Thursday.

Ajay Rajadhyaksha, global chair of research at Barclays, added that, following publication of the October jobs figures, markets now saw a 0.25 percentage cut in December as “definitely on the cards”.

US government debt safety yields dropped from three-month highs immediately after the update, reflecting falling profit rate expectations. 

The policy-sensitive two-year Treasury profit, which moves inversely to prices, fell 0.04 percentage points to 4.12 per cent after the payroll figure was published, reversing its previous path.

US stocks opened higher on Friday, with the S&P 500 up 0.7 per cent and the technology-heavy Nasdaq Composite up 0.9 per cent in early dealings.

“We expected the jobs update to certainly be softer in relation to prior months, just due to distortions created by hurricanes and strikes,” said Mark Cabana, head of US rates schedule at lender of America.

But he added: “That said, it was softer than our economists’ expectations — and it does appear as though it is consistent with a softening overall labour trade.”

The October jobs data was gathered during the week that Hurricane Milton made landfall in Florida and shortly after Hurricane Helene slammed the south-east of the US.

The continuing strike at Boeing, in which 33,000 employees have stopped working, also dragged the figure down.

The BLS said the hurricanes had affected jobs growth but said it was “not feasible to quantify the net result” on the monthly transformation in employment, hours worked or wage gains. It added that survey responses were “well below average” for the jobs update.

Many economists expected a drag of around 40,000 positions from the storms alone.

Manufacturing employment fell by 46,000 in October, the vast majority of which was tied to the transportation equipment sector, which was directly affected by the strikes.

The construction industry, retail, leisure and hospitality and monetary sectors all also recorded little or no jobs growth.

Overall, payrolls growth in the private sector fell by 28,000 positions.

As worth rise has slowed in recent months, the Fed has become increasingly concentrated on protecting the labour trade.

In an attempt to achieve a “soft landing”, in which worth rise returns to the Fed’s 2 per cent target without triggering a downturn, officials are trying to lower rates to a “neutral” level that does not hamper growth.

Policymakers and economists appear increasingly optimistic about such an outcome, and have signalled they expect the downward distortion of October’s payrolls figure to fade away with the impact of the strike and the hurricanes over period.