Updated at 8:53 amEDT
The U.S. economy added far fewer new jobs than expected last month, when twin hurricanes in Florida and the Southeast, as well as a devastating strike at plane maker Boeing, disrupted a solid set of fall employment numbers.
The Bureau of Labor Statistics reported Friday that 12,000 net new jobs were created in October, well below September's downwardly revised total of 223,000 and also well below this year's monthly average of about 200,000.
Average hourly earnings in October rose 0.4% from the previous month's levels and were up 4% annually, with both figures in line with Wall Street forecasts.
However, the overall unemployment rate remained at 4.1%, while the labor force participation rate fell modestly to 62.6%, the lowest since June.
Economists expected a total of about 106,000 new hires in the September report with an overall unemployment rate of 4.1%.
The Labor Department estimated that the ongoing strike at troubled plane maker Boeing (bachelor of arts) which began last month, eliminated about 44,000 jobs from the transportation sector, but said it could not quantify the impact of Hurricanes Helen and Milton on the regional labor market.
“As we thought, this jobs report was going to have a lot of noise around any signal. With two hurricanes and a Boeing attack, the likelihood of this report being clean was going to be tough,” said Bryon Anderson, head of fixed income. of Laffer Tengler Investments.
“That the unemployment rate is not rising again is a good sign for the economy and breaks the Sahm rule that everyone was panicking about a couple of months ago,” he added. “Hourly earnings increases continue to rise at a healthy pace, so we are still confident in the economy.”
“Nonfarm payrolls may not be very good at first glance, but this recent decline should be a temporary blip as reconstruction and activity recovers (after) the hurricanes and the likelihood of the Boeing strike ending” Anderson concluded.
US stock futures pared their gains following the data release, with the S&P 500 now trading 25 points higher and the Nasdaq up 115 points and the Dow up 155 points.
Benchmark 10-year Treasury yields fell 7 basis points to 4.241% following the data release, while rate-sensitive 2-year bonds fell 13 basis points to 4.081%.
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Meanwhile, CME Group's FedWatch puts the odds of a quarter-point cut next week in Washington at around 98%, and the chances of a subsequent cut in December jump from 70% to around 85%.
Earlier this week, payroll processing group ADP's National Employment report for October showed that private employers added 233,000 new hires, the most in more than a year, with gains in education and health services, as well as under construction, leading the way.
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“Even amid the hurricane recovery, job growth was strong in October,” said ADP Chief Economist Nela Richardson. “As we close out the year, hiring in the United States is proving to be strong and generally resilient.”
In fact, that report came just before a solid third-quarter GDP reading from the Commerce Department, which showed a 2.8% growth rate and solid consumer spending, as well as a PCE inflation report that hinted at new inflationary pressures in the last months of the year.
“The slowdown in inflation, including the stickiest components, should keep the Federal Reserve on track to cut rates in November and December,” said Jeffery Roach, chief economist at LPL Financial.
“However, investors should prepare for some bullshit, as the road to 2% inflation will be long and difficult.”
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