US jobs growth at weakest level since 2020

The US economy recorded its weakest monthly jobs growth since 2020 after devastating hurricanes and industrial action battered the labour market before next week’s presidential election.
An important measure of US payrolls expanded by 12,000 in October, far lower than the 113,000 forecast by economists and the weakest monthly growth since December 2020.
Jobs growth suffered after tropical cyclones hit the country’s south coast last month and following widespread industrial action at Boeing.
Previous readings for the past two months were also downgraded: payrolls expanded by 223,000 in September, revised down by 31,000 from the previous estimate, and August numbers were more than halved from 159,000 to 78,000, according to the US Bureau of Labor Statistics.
Private sector jobs growth fell by 28,000 last month but the public sector created 40,000 jobs, leading to an overall increase in non-farm payrolls. The unemployment rate was unchanged at 4.1 per cent, in line with economists’ expectations.
October’s jobs figures are the last big economic release before Tuesday’s election. The strength of the US labour market and the impressive growth rates of the wider economy has not translated into a polling lead for Kamala Harris, the vice-president and Democratic Party nominee.
The hit to payrolls was expected after large tropical storms devastated states including Florida. Boeing, one of America’s largest industrial employers, has also suffered from seven-week strike action from 40,000 workers demanding better pay.
The US Federal Reserve is widely expected to cut interest rates next week. Traders are placing a 95 per cent probability of another monetary loosening from the Fed of 25 basis points. It would take US interest rates down to a range of 4.5 to 4.75 per cent.
Isabel Albarran, investment officer at Close Brothers Asset Management, said the Fed was unlikely to carry out another outsized 50-basis-point interest rate cut, partly over concerns about a resurgence of inflation under a Donald Trump administration. “With the unemployment rate remaining stable at 4.1 per cent and recent claims data proving pretty resilient, it will be extremely difficult for central bank to justify anything larger than a 25-basis-point cut next week,” she said.
“The looming election is likely also factoring into interest rate expectations. With the chances of a Republican victory rising, the prospect of fiscal easing, trade tariffs and tighter immigration provide three reasons for the Fed to be more cautious on inflation risks, diminishing comfort in rate cuts.”
The dollar declined by 0.2 per cent against a basket of major trading currencies after the release and US government bond yields fell by 0.04 percentage points to 4.25 per cent. Yields fall when bond prices rise.
Brian Coulton, chief economist at Fitch Ratings, said the slowdown in the US jobs market was not dramatic, with three-monthly payroll averages at 11,900. “With the broader evidence of ongoing consumer strength, the Fed is unlikely to place a high weight on the headline 12,000 number,” he said.