The US is recruiting at its slowest since Biden took office, due to strikes and hurricanes

AFP, Washington

Sat Nov 2 2024 11:28 Last update: Sat Nov 2 2024 11:35

Elizabeth Brunner (L) and Hope Johnson (R), recruiters for the City of Pompano Beach, speak to job seekers during the JobNewsUSA.com South Florida Job Fair held at the Amerant Bank Arena on June 26, 2024 in Sunrise, Florida. Photo: AFP/FILE

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Elizabeth Brunner (L) and Hope Johnson (R), recruiters for the City of Pompano Beach, speak to job seekers during the JobNewsUSA.com South Florida Job Fair held at the Amerant Bank Arena on June 26, 2024 in Sunrise, Florida. Photo: AFP/FILE

U.S. job growth slowed dramatically in October, temporarily hit by hurricanes and labor strikes, in the last major economic snapshot of a razor-sharp presidential election campaign in which cost-of-living concerns have dominated voters’ concerns.

The world’s largest economy created just 12,000 jobs last month, far below expectations and lower than the revised 223,000 in September, the Labor Ministry said. The unemployment rate remained unchanged at 4.1 percent.

The workforce and unemployment data will be closely scrutinized by the teams of both presidential candidates — Democrat Kamala Harris and Republican Donald Trump — but the employment numbers would have been higher if not for devastating hurricanes and worker strikes.

Unusually weak hiring numbers threaten to affect the way Americans view the labor market, some analysts warned.

The collective impact of Hurricanes Helene and Milton, along with work stoppages by Boeing workers and others, could reduce job growth by as many as 100,000 jobs, Jared Bernstein, chairman of the Council of Economic Advisers, said earlier.

But the latest figure was still well below the market consensus estimate of 120,000.

This is the slowest hiring rate since late 2020 and since President Joe Biden took office.

“Job growth is expected to rebound in November as our hurricane recovery and rebuilding efforts continue,” Biden said Friday, also highlighting a new contract proposal for striking Boeing workers.

But Trump called the report “a great shame,” blaming Harris for the decline in manufacturing jobs even though it was hit hard by strike activity.

The average hourly wage increased by 0.4 percent compared to September, slightly above expectations.

The Department of Labor said its research “is not intended to isolate the effects of extreme weather events.”

But it added: “It is likely that employment estimates in some industries were affected by the hurricanes.”

The report also states that manufacturing employment fell by 46,000, while transportation equipment production fell by 44,000, largely due to strike activity.

In addition to about 33,000 Boeing workers on strike, there were also 5,000 machinists at Textron Aviation and 3,400 hotel workers, said Lydia Boussour, a senior economist at EY.

In the labor survey that tracks hiring, workers who have been on strike for the entire reference pay period are not counted as employees, Boussour said.

Meanwhile, Hurricane Helene made landfall in late September, meaning some people were likely unable to return to work when the survey was conducted.

Similarly, the survey week coincided with the landfall of Hurricane Milton.

Economists Carl Weinberg and Rubeela Farooqi of High Frequency Economics suggested treating the hiring component of the report as “an unreliable indicator” of the true state of the market.

A weaker workforce figure “will likely weigh on how people view economic conditions,” Farooqi told AFP.

More broadly, “households are not feeling the benefits of a still strong labor market,” she added, pointing to cumulative inflation.

But economist Harry Holzer, a non-resident senior fellow at the Brookings Institution in Washington, expects the public was already expecting lower numbers this time.

A bigger problem would be a sharp slowdown, taking temporary factors into account.

“Rising incomes keep consumers’ wallets open. Any disruption to this would indicate that the economy’s growth engine is beginning to sputter,” said national economist Oren Klachkin.

“The labor market is cooling, but I wouldn’t call it cold,” he said.

Strikes and hurricanes only partly explain the weakness, warned economist Samuel Tombs of Pantheon Macroeconomics.

Payroll excluding temporary relief or leisure and hospitality – which is typically hit hard by hurricanes – along with transportation equipment manufacturing, saw only half the average increase in the previous 12 months, he said.

There was no impact on the unemployment rate as those who are on strike or unable to work due to weather conditions are still considered employed, he said.

But the survey that followed showed a drop in employment of 368,000 people, said Mike Fratantoni, chief economist for the Mortgage Bankers Association.

While there are no major layoffs, there has been a continued reduction in vacancies, he added.

Analysts expect the Fed to cut rates by a quarter of a percentage point next week, instead of not cutting rates.

“Fed officials will likely see through the noisy payroll numbers,” Boussour said.