This week, we are breaking down the latest “First Friday” jobs report. October’s hiring totals were the lowest since December 2020 but strikes and storms made it an unusually noisy jobs report.
U.S. businesses added just 12,000 jobs in October, well below expectations of 120,000. The unemployment rate held steady at 4.1%. Wages grew by 4% over the past 12 months, unchanged from September.
Earlier this week, I presented a webinar for ERE on how the U.S. election might impact hiring and talent acquisition in 2025 and beyond. Before the report was released, I cautioned attendees to beware of October's jobs report being used for political positioning.
In this newsletter, I present an objective view of the U.S. labor market and break through some of the hyperbolic headlines that create confusion over the state of our economy.
There's a lot of noise in this report, but it doesn't change what LaborIQ has guided for the past several months: the economy has been cooling and stabilizing following the hottest labor market in more than a generation. That hot labor market was compelled by a historic job loss due to the 2020 pandemic.
The labor market is certainly cooling, but October's job gains could underestimate hiring totals by as much as 100,000 due to strikes and hurricanes, with those challenges compounded by some nuances in the survey itself.
✈️ Labor disputes. More than 30,000 Boeing employees, who are members of the International Association of Machinists and Aerospace Workers union, have been on strike since September 13. The BLS estimates that between 20,000 and 40,000 workers were out of work due to labor disputes in October. The strike was likely the main reason for manufacturing job losses in October, with the transportation equipment sector shedding 44,000 jobs. The union is scheduled to vote on a new contract on November 4, which will have a big impact on November’s employment totals if approved.
🌀 Work absences due to weather. Hurricanes Helene and Milton hit the southeast in late September and mid-October, respectively; and the impact to employment last month was substantial. According to the BLS, more than 500,000 workers were absent due to weather in October – ten times the 50,000 missing work due to weather in September.
📉 Survey response rates. Another factor contributing to the noisiness of the October jobs report is the survey itself. The BLS reported a “well below average” response rate, which could be due to weather as well as a shortened collection period. The survey is conducted mid-month, and the collection period can range from 10 to 16 days. Last month the collection period was at the lower end of the range, giving businesses less time to respond.
Given these challenges, don’t be surprised by a stronger jobs report in November.
Even in the optimistic scenario where labor and weather disruptions would have resulted in an additional 100,000 jobs last month, all data points to a resilient but cooling U.S. labor market. Hiring totals for August and September were revised downward by a combined 112,000 jobs.
Government and healthcare dominated once again, combining to add 92,000 jobs in October. Other bright spots were construction (+8,000) and education (+6000).
Manufacturing shed 46,000 due to the Boeing strike, with a disproportionate share of jobs lost in transportation equipment manufacturing (-44,400).
Professional and business services lost 47,000 jobs in October due to continued weakness in employment services (-51,500). With the shortage of talent and a cooling labor market, businesses may prefer permanent, full-time employees to contract workers. This trend continues to pose a challenge to external recruiting and talent acquisition firms, especially those who place temporary workers.
Even with the challenges posed by labor disputes and hurricanes, the unemployment rate held steady at 4.1%. Layoffs have not increased substantially, and unemployment insurance claims have fallen after a spike in mid-October following the hurricanes.
Wages grew by 4% over the 12 months ending in October, matching September's 12-month growth rate. Inflation ticked down to 2.2% year-over-year, presenting strong real wage gains if the pattern continues.
For businesses, even in industries that may be sluggish right now, it's important not to lose focus on compensation and talent retention.