Due to two hurricanes and a Boeing strike, the U.S. non-farm payrolls in October plummeted to 12,000

Due to the impact of two hurricanes and a Boeing workers' strike, the number of non-farm jobs added in the U.S. in October plummeted, just a step away from negative growth.

On Friday, November 1st, the U.S. Bureau of Labor Statistics released data showing that the number of non-farm jobs added in October dropped sharply to 12,000 from September's 254,000 (revised down to 223,000), marking the lowest level since 2020 and far below the expected 100,000.

The unemployment rate remained unchanged after rounding, holding steady at 4.1%, consistent with expectations and the previous value. However, on a non-rounded basis, it rose to 4.14%, an increase of 0.09 percentage points from the previous month.

Wage growth remained stable, with the average hourly wage in October rising 4% year-on-year, in line with expectations, while the previous value was revised down from 4% to 3.9%; month-on-month, it increased by 0.4%, slightly above the expected 0.3%, with the previous value revised down from 0.4% to 0.3%.

Following the data release, traders increased their bets on a 25 basis point rate cut by the Federal Reserve in November. U.S. Treasury yields plummeted, with the 2-year Treasury yield falling over 5 basis points to 4.125%; the 10-year Treasury yield dropped more than 2 basis points to 4.261%; the U.S. dollar index fell slightly, down 0.06% for the day. Gold prices rose sharply, increasing 0.51% to $2,758 per ounce.

The Bureau of Labor Statistics stated in a release that hurricanes may have affected employment in certain sectors but indicated that it could not quantify the impact of the hurricanes on national employment numbers, hours worked, or income. The agency noted that the response rate for the business surveys providing information for these statistics was "far below average levels."

The Bureau also stated that the hurricanes had no significant impact on the overall unemployment rate in the U.S.

It is noteworthy that, given that high-level officials such as Federal Reserve "voting member" Waller and Biden's chief economic advisor had previously issued "warnings" regarding the non-farm data, traders' expectations for a rate cut did not change significantly, continuing to predict a 25 basis point cut next week as "a done deal," and expecting slightly more than three 25 basis point cuts by March next year.

Unemployment Rate Appears Stable, Quietly Rising Behind the Scenes

Regarding the unemployment rate, Nick Timiraos from the "New Federal Reserve News Agency" noticed a subtle change. He tweeted immediately after the data release:

The unemployment rate released today remains unchanged after rounding, but on a non-rounded basis, it actually rose from 4.05% to 4.14% (an increase of 0.09 percentage points)

Among the unemployed population, the number of permanent job losses slightly increased to 1.8 million in October. The number of temporary job losses remained relatively unchanged at 846,000.

The labor participation rate in October was 62.6%, and the employment-population ratio was 60.0%, both showing little change.

Previous values have been significantly revised down again; if this continues, actual employment growth in October may be negative.

The number of new jobs added in previous months has been significantly revised down again: the number of new jobs added in August was revised down by 8,000 (from 159,000 to 78,000), and September was revised down by 31,000 (from 254,000 to 223,000). After these revisions, the total number of new jobs added in August and September has been revised down by 112,000.

Including this month, in the past nine months, the employment figures have been revised down in seven months. This also means that once the employment data for November is released, it is almost certain that the new employment data for October will be revised to a negative value.

Government employment remains stable, while manufacturing is severely hampered by strikes.

The situation is not limited to this; although the total number of new jobs added is barely positive, if we exclude 40,000 government job positions, the new jobs added in the private sector are actually negative, at -28,000, down from the previously revised 223,000 last month, marking the first negative growth since December 2020.

By industry, the new jobs added in October were mainly contributed by healthcare and government sectors, while manufacturing was severely hampered by strikes:

The healthcare sector added 52,000 new jobs;

Employment in government sectors continued to rise, with an addition of 40,000 jobs, maintaining a stable growth rate;

In the professional and business services sector, temporary assistance services saw a decrease of 49,000 jobs. Since peaking in March 2022, temporary assistance services employment has decreased by 577,000.

Manufacturing jobs decreased by 46,000, with transportation equipment manufacturing jobs decreasing by 44,000, primarily due to strike activities.

Employment in the construction sector changed little, increasing by 8,000.