October jobs report: Storms and strikes

The latest jobs numbers are out from the U.S. Bureau of Labor Statistics. What do they mean for job seekers, employers and investors? Here’s a quick take from Glassdoor’s Lead Economist Daniel Zhao.

The October jobs report today came in soft as the U.S. labor market experienced a wave of storms and strikes in the last month. Temporary effects from Hurricanes Helene and Milton and strikes at Boeing and elsewhere are muddying the waters. While payroll gains were lower than expected, it’s always difficult to predict how hurricane-affected jobs reports will play out. As such, it’s prudent to not take today’s report at face value and instead focus on the broader trend of a slowing job market. Ironically, for the last jobs report before the election, today’s report is unusually unimportant economically due to the storms and strikes.

Key stats:

Hurricanes Helene and Milton had large but difficult to estimate impacts

Payroll employment slowed more than expected in October, coming in at 12,000 jobs added, down significantly from 238,000 in September. Storm impacts may be seen in industries like leisure and hospitality which  lost 4,000 jobs in October after gaining 40,000 in September.

The household survey does show the impact from the hurricanes with the number of workers employed but absent due to weather spiking from 52,000 in September to 515,000 in October. These workers don't count as unemployed as they kept their jobs, which is why unemployment was flat while payroll growth slowed significantly. This also suggests that we’re likely to see a spike in job gains in November as workers return to payrolls from weather-related furloughs.

Ultimately, however, it’s difficult to estimate the precise impact from natural disasters as it depends on when the disaster hits during the period, where exactly the disaster strikes and how long the impacts last. An added complication is that survey collection is often disrupted by natural disasters, with the CES first release response rate falling to 47.4% in October from 62.2% in September. Late arriving responses will usually boost the final release response rates above the mid-80s, but the low first release response rates mean larger-than-usual revisions for October may be possible.

The Boeing strike's impacts are clearer

Another major drag on payroll gains in October was the Boeing strike starting in September, which affects 33,000 workers. The impact can also spill over beyond Boeing itself if upstream parts suppliers have to furlough workers due to the production halt. In fact, transportation equipment manufacturing (which includes aerospace manufacturing) saw a drop in payroll employment of 44,400, likely largely due to the strike.

Recession indicator no longer indicating

The unemployment rate was flat at 4.1% in October. The plateau in the unemployment rate means that the popular Sahm rule recession indicator has triggered off.

The Sahm rule threshold is based on the rate of the rise in unemployment from recent lows, so as unemployment rises, the threshold also slowly increases. The plateau in unemployment in recent months means the unemployment rate is back under that threshold again, thus turning the recession indicator off.

Unfortunately, there isn’t historical precedent for what this means. The Sahm rule has not had false alarms in the past, but there aren’t many recessions to calibrate the rule precisely against.

Broadly speaking, however, the fact that the rise in unemployment has leveled off after a concerning first half of the year is good, though it likely transitions the unemployment rate from a bright red light to a blinking yellow one.

Some softness for prime-age workers

Despite the flat unemployment rate, two other important statistics from the household survey came in softer. The prime-age employment-population ratio fell to 80.6%, back to January levels, and the prime-age labor force participation rate fell to 83.5%, back to April levels after rising over the summer. Both measures are strong by historical standards, but have lost ground from their multi-decade highs.

More insights

Payroll employment grew just 12,000 in October, the lowest jobs added since December 2020, largely due to temporary factors like the hurricanes and strikes. As businesses reopen from the hurricanes, payrolls should rebound in November. If the Boeing strike ends in the next 2 weeks, that may also boost November payrolls.

Average hourly earnings grew 4% year-over-year in October, up from 3.9% in September. Wage growth has come in firmer recently—4.5% annualized in the last 3 months—but in the context of a slowing job market and a falling quits rate, ongoing reacceleration in wage growth seems unlikely.

Stepping back from the storms and strikes, the job market has been slowing in recent months, driven in large part by softness in professional & business services (mostly driven by temporary help services) as well as healthcare & non-education government (which powered growth in the first half of 2024).

Headline unemployment was flat and it was also largely unchanged across race/ethnicity with a small drop for Asian workers (-0.2 percentage points) and a small rise for white workers (+0.2pp)

To speak with Daniel Zhao about this report, please contact pr@glassdoor.com.