Articles

October’s Non-Farm Payrolls: Weak but Not a Reflection on the Economy

Nov 4, 2024

October’s non-farm payrolls was one of the most anticipated releases, but expectations had a very wide confidence band due to the impact of hurricanes and strikes. Coming in at only +12K in October, the level of jobs in the economy was virtually unchanged. This was substantially below the +115K expectation. Additionally, both August and September’s data was revised lower.

This weak reading does not say much about the underlying economy due to the data volatility caused by hurricanes and strikes. Manufacturing employment decreased 46K, reflecting the impact of strike activity. The unemployment rate remained at 4.1% with the number of unemployed remaining reasonably similar. Additionally, average hourly earnings increased 0.4% m/m, and 4% y/y. As such, while the headline job gains were soft, the data from the household survey remained solid.

This has been a week of mixed labor data leading into next week’s FOMC meeting. JOLTS and Non-farm payrolls came in below expectations while the ADP jobs report was strong. From a positioning standpoint, while this was an important report leading into the November FOMC meeting, one weak reading does not change the narrative on the underlying resilience of the U.S. economy. While expectations for a November FOMC rate cut have improved, given the data volatility this month, the Fed is unlikely to view this report as a reflection of labor market weakness. This increases the importance of November’s data leading into the end of the year.

Category: Portfolios

Topics: Macroeconomic

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