Economic Outlook: Jobs Report to Reflect Hurricane and Strike Impact
The upcoming jobs report for October is expected to reveal a significant slowdown in job creation, with economists predicting a mere 100,000 new payrolls. This would be the lowest job total in nearly four years, largely due to the devastating effects of Hurricanes Helene and Milton, as well as the major labor strike at Boeing.
Hurricane and Strike Disruptions to Impact Payrolls
The hurricanes are estimated to have caused historic levels of monetary damage, with Goldman Sachs predicting that Hurricane Helene alone could shave off as much as 50,000 from the payrolls count. The Boeing strike, which has sidelined 33,000 workers, could further lower the total by 41,000. The White House estimates that these events cumulatively may hit the payrolls count by as many as 100,000.
Despite Disruptions, Labor Market Remains Strong
However, leading indicators suggest that hiring has continued apace, with layoffs remaining low despite the damage from the storms and strikes. Payrolls processing firm ADP reported that private companies hired 233,000 new workers in October, well above forecasts. Initial jobless claims also fell to 216,000, equaling the lowest level since late April.
Unemployment Rate Expected to Remain Low
Economists expect the unemployment rate to remain unchanged at 4.1%, with average hourly earnings projected to rise 0.3% for the month and 4% from a year ago. This suggests that wages will continue to grow faster than inflation, underscoring the health of the U.S. economy.
Fed Interest Rate Cuts May Be Necessary
Despite the labor market’s resilience, job growth has been slowing, and revisions to previous counts have taken a net 310,000 off initial estimates year to date through July. Experts warn that the market may need some help from Federal Reserve interest rate cuts to stop the slide. The Fed’s attention should be firmly on the labor market, as job seekers and workers struggle to find acceptable jobs.
Key Sectors Driving Job Creation
Government, health care, and leisure and hospitality have been leading areas of job creation this year. Health care, in particular, continues to drive job growth, with skilled trades, finance, and related businesses such as insurance also showing increased interest.
Jobs Report to Provide Clarity on Economic Health
While the headline jobs number may be noisy due to one-time events, the report will provide valuable insights into the health of the U.S. economy. Experts believe that the labor market is still growing, albeit slowly, and that the unemployment rate will remain low. The report will reinforce the big picture, which is that the labor market is still growing, but slowing.
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