(Reuters) -U.S. job growth slowed sharply in October amid disruptions from hurricanes and strikes by aerospace factory workers, but the unemployment rate held steady at 4.1%, offering assurance that the labor market remained on solid footing ahead of Tuesday’s election.
Nonfarm payrolls increased by 12,000 jobs last month after surging by a downwardly revised 223,000 in September, the Labor Department said on Friday. Economists polled by Reuters had forecast payrolls rising 113,000.
MARKET REACTION:STOCKS: S&P 500 E-minis added to gains and were up 0.43%
BONDS: The yield on benchmark U.S. 10-year notesfell to 4.2605%, the two-year note yield fell to4.1124%FOREX: The dollar index turned 0.019% lower COMMENTS:
MATT BUSH, US ECONOMIST, GUGGENHEIM INVESTMENTS, NEW YORK
“(The Fed) were pretty locked in, no matter what this report was going to say, because of just the uncertainty around hurricane impacts. The concern was, they may try to reduce expectations for cuts beyond the November meeting, maybe walk back expectations for December or walk back the number of cuts they were kind of signaling for 2025. This report was weak enough where they’ll just keep all options open and firmly leave the door open to another cut in December and the meetings beyond that.”
BEN VASKE, SENIOR INVESTMENT STRATEGIST, ORION PORTFOLIO SOLUTIONS, OMAHA, NEBRASKA
“October job growth was sharply lower relative to September and consensus expectations. However, lower growth was expected to a degree given election uncertainty, recent labor strikes, and hurricanes impacting the southeast US – the labor market has already begun recovery from the two latter effects. Despite lower growth, the unemployment rate remained steady, and early reactions seem to not be impacting expectations that the Fed will proceed with another 25-basis point rate cut in November.”
CHARLIE RIPLEY, SENIOR INVESTMENT STRATEGIST, ALLIANZ INVESTMENT MANAGEMENT, MINNEAPOLIS
“From an investment standpoint, this doesn’t really change much in terms of what’s expected from a Fed standpoint or thoughts around the slowing economy. We have to look past this month’s data and see what comes out in the following months when there’s much less noise.”
“There’s definitely some mixed signals – the weaker payroll number versus an unemployment rate that was largely the same, and then a small uptick on the monthly wage side. When you round it all together it’s a pretty mixed report.”
PETER CARDILLO, CHIEF MARKET ECONOMIST, SPARTAN CAPITAL SECURITIES, NEW YORK
“Obviously, this is a big miss and if you take away the fact that some of it could be attributed to hurricanes in Florida and the Boeing (NYSE:BA) strike, even with even factoring in those numbers, it’s still a big miss and it points to the possibility the labor market is weakening to the point where the Fed may have to consider being more aggressive.”
“What is worrying, is hourly wages rose again by 0.4% and the participation rate is dropping.”
“This is likely to rekindle the possibility that the Fed will cut rates twice before the end of the year. As of yesterday, I was expecting the Fed will probably skip a cut at its next meeting, but I think we can count on a 25 bp cut in November and another in December.“
HELEN GIVEN, ASSOCIATE DIRECTOR OF TRADING, MONEX USA, WASHINGTON DC
“The headline figure has been expected for quite some time to be low, though perhaps not this low, but it looks like right now that traders are treating the entire data dump this morning with a grain of salt.”
“The point of concern, though, could lie with the two-month net payroll revision, which is quite negative and calls into question September’s blowout headline number. The unemployment rate didn’t change, though, and average hourly earnings stayed steady.”
“FX markets are taking this pretty much in stride since so many of the external factors influencing the numbers were discussed ahead of time.”
LINDSAY ROSNER, HEAD OF MULTI SECTOR FIXED INCOME INVESTING, GOLDMAN SACHS ASSET MANAGEMENT (via email)
“Strikes and storms weighed on this month’s jobs data with jobs growth surprising to the downside and the unemployment rate staying put. While the Fed will likely attribute some of the weakness in today’s data to one-off factors, the softness in today’s data argues for the Fed to continue its easing cycle at next week’s meeting. Stormy numbers but sky clearing for November 25 bp cut.”
WASIF LATIF, PRESIDENT AND CHIEF INVESTMENT OFFICER, SARMAYA PARTNERS, PRINCETON, NEW JERSEY
“It’s definitely a surprising number on the downside, but I think given all the noise that was expected in this number between the hurricane and the revisions and other stuff. We do need to take it with a grain of salt, just. Obviously, the market is still in the sort of bad-news-is-good-news scenario because a weak number like this increases the odds of Fed cuts. So the recent push backs that the market was getting on trying to push out the rate cuts that obviously is taking a little bit of a backseat. The initial knee-jerk reaction is the bad news is good news and this is good for risk assets as well as bonds. In the long run, it might not be as impactful of a number because of the noise.”
BRYON ANDERSON, HEAD OF FIXED INCOME, LAFFER TENGLER INVESTMENTS, SCOTTSDALE, ARIZONA
“As we thought this jobs report was going to have a lot of noise around any signal. With two hurricanes and a Boeing strike the likelihood of this report being clean was going to be hard. The unemployment rate not increasing again is a good sign for the economy and breaks the Sahm rule everyone was panicking about a couple months ago. Hourly earnings increases are still increasing at a healthy pace so we still have confidence in the economy. The nonfarm payrolls may not be great on its face, but this recent drop should be a temporary miss as rebuilding and activity picks up with after the Hurricanes and likelihood of the Boeing strike ending.”
BRIAN JACOBSEN, CHIEF ECONOMIST, ANNEX WEALTH MANAGEMENT, MENOMONEE FALLS, WISCONSIN
“The employment situation is opaque. The hurricane effects are hard to quantify, so most people will see these numbers and just ignore them. There were some significant revisions to previous months’ data, which should not be glossed over. The response rates are low and the error bands are large on these reports. The Fed will likely ignore this release and hopefully just stay the course they laid out in their last summary of economic projections, which would mean a 25 basis point cut in November and another in December.”
ROBERT PAVLIK, SENIOR PORTFOLIO MANAGER, DAKOTA WEALTH, FAIRFIELD, CONNECTICUT
“I don’t this it’s a compromise on the economy and we were expecting a weaker number, but not this weak. It’s again a combination of a slowing economy and the hurricanes and strikes. So, I’m not overly worried about what it’s going to mean for the equity market overall…We’re on track for another 25-basis points rate cut.”
BRYCE DOTY, SENIOR PORTFOLIO MANAGER, SIT INVESTMENT ADVISORS, MINNEAPOLIS
“This report dampens the enthusiasm from last month’s report. However, we are still expecting only a 25 bps cut by the Fed next week as the economy is still unlikely to go into a recession. The yield curve should steepen on this news, led by shorter maturity treasury yields coming back down.”
