Economists expect that the U.S. non-farm payrolls in October may experience the slowest growth in nearly four years due to the dual impact of hurricanes and strikes

Due to strong hurricanes and a major strike, non-farm employment figures in October may be significantly affected, making it potentially the slowest month for job growth in nearly four years.

According to a survey of economists by Dow Jones, the U.S. Bureau of Labor Statistics is expected to report on Friday that non-farm employment increased by only about 100,000 this month, dragged down by hurricanes Helene and Milton as well as the Boeing strike. If the data is accurate, this would be the lowest increase since December 2020, far below September's 254,000. The report is expected to show the unemployment rate remaining unchanged at 4.1%.

Michael Arone, Chief Investment Strategist at State Street Global Advisors, stated, "When we strip away these impacts from the employment data, the unemployment rate will remain low, and I believe wage growth will outpace inflation, all of which indicate the health of the U.S. economy."

In terms of wages, the average hourly wage is expected to rise by 0.3%, with a year-on-year increase of 4%, consistent with September, further supporting the view that inflation is sticky but not accelerating.

Regardless of the outcome, the market may overlook the impact of this report, as many one-time events have suppressed hiring activity. Arone added, "The overall performance of the employment data may be somewhat volatile, but I believe it still shows a trend towards a soft landing, and the U.S. economy remains in good shape."

The hurricanes have caused what could be historic economic losses, while the Boeing (BA.US) strike has left 33,000 workers idle.

Goldman Sachs estimates that hurricane Helene could reduce non-farm employment by as much as 50,000, while hurricane Milton, occurring later, may not impact October's data. Meanwhile, the Boeing strike could reduce total employment by 41,000. Goldman Sachs expects total non-farm employment growth in October to be 95,000.

Data Still Shows Strong Performance

Despite the losses from the hurricanes and the strike, some data prior to this highly anticipated employment report still indicate that hiring activity remains robust, with low layoff numbers.

ADP reported this week that private sector employment increased by 233,000 in October, far exceeding expectations, while initial jobless claims fell to 216,000, close to the lowest level since late April.

The White House estimates that these events could cumulatively affect non-farm employment by as much as 100,000. Jared Bernstein, Chairman of the Council of Economic Advisers, stated on Wednesday, "These disturbances will make this month's employment report harder to interpret than usual."

Overall, employment data has been quite volatile since the COVID-19 pandemic.

Earlier this year, the Bureau of Labor Statistics announced a benchmark revision, lowering the data for the 12 months prior to March 2024 by 818,000. The revised net decrease for this year's data as of July is 310,000.

Julia Pollak, Chief Economist at ZipRecruiter, stated, "This report will reinforce the big picture that the labor market is still growing, but the growth rate is indeed slowing." She added, "The slowdown is becoming increasingly concentrated in a few sectors." This year's main areas of employment growth include government, healthcare, and the leisure and hospitality industry. Pollak stated that this trend is particularly evident in the healthcare sector, and ZipRecruiter has also observed an increase in demand for skilled trades and positions in finance and related industries (such as insurance).

However, she pointed out that the overall slowdown in the job market may require the Federal Reserve to lower interest rates to curb this downward trend. "In the past two quarters, job growth has already fallen below pre-pandemic average levels, and growth is mainly concentrated in a few areas," Pollak said. "This has a substantial impact on job seekers and employees, as their bargaining power diminishes, and many find it difficult to secure their ideal jobs. Therefore, I believe the Federal Reserve should focus on the labor market."