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The Department of Labor is scheduled to issue a statement activity report in October on Friday, which will be the last major economic data release before Election Day and the Federal Reserve’s policy meeting next week.
American voters and Fed policymakers will have an opportunity to analyze the state of play in the labor market and factor it into their decisions next week. Voters will decide whether government control will be divided, or unified under Democrats or Republicans – while central bank policymakers will decide whether to cut interest rates again and by how much.
The US economy is expected to add 115,000 jobs in October, according to the LSEG survey of economists. That would be a much slower pace of job growth than September, when 254,000 jobs were added above the LSEG forecast of 140,000 jobs.
The October jobs report will be influenced in part by several factors that could indicate slower-than-expected job growth – including recent hurricanes in the US Southeast and labor disputes.
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Voters and central bank policymakers will look at the state of the labor market ahead of a busy political and economic week when the October jobs report is released on Friday. (Photos by Joe Raedle/Getty Images)
Nancy Vanden Houten, an American economist at Oxford Economics, explained that her company expects that the ongoing Boeing strike and the smaller, recently resolved strike and layoffs in the auto industry will lead to job losses. manufacturing sector in October – although those affected by the strike may return in future reports.
“We expect a strike affecting 33,000 workers at Boeing and a strike of 5,000 workers at Textron, an aerospace parts company in Kansas, to offset the loss of 50,000 manufacturing jobs,” he said in the report. Vanden Houten added that although the Textron strike ended last week, it was active during the Bureau of Labor Statistics’ October jobs report.
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Economic disruption due to the damage caused by Hurricanes Helene and Milton is expected to be considered in the October jobs report. (Jabin Botsford/The Washington Post via Getty Images/Getty Images)
He also noted that the layoffs at Stellantis have affected approximately 2,000 workers and that they are ongoing The Boeing strike caused problems for the aerospace giant’s suppliers, causing them to outsource workers to other sectors. Another strike by 3,400 hotel workers will disrupt job creation in the leisure and hospitality industry.
Venden Houten added that Hurricanes Helene and Milton approximately 70,000 are expected to be released in net job growth across industries, but especially in leisure and hospitality, business and professional services, and construction.
He noted that there is “great uncertainty about the impact of storms on employment” but that the company’s analysis looked at both the impact of storms in comparable areas, as well as the size of employment in affected industries in areas hit hard by storms, such as Asheville, North Carolina.
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Fed Chairman Jerome Powell and the central bank’s policy unit will announce their decision to cut rates next Thursday. (Photo by MANDEL NGAN/AFP via Getty Images / Getty Images)
Ellen Zentner, chief economic strategist for Morgan Stanley Wealth Management, provided a similar analysis of those impacts in the October jobs report and explained that it could result in a mixed outlook for the economy after the recession. ADP activities report was stronger than expected and third quarter US GDP was cooler than expected in Wednesday’s data release.
“Hurricanes and strikes are expected to result in a soft jobs report this Friday, and so far this week, the data has been mixed – job openings fell and layoffs increased, while ADP private payrolls were the strongest in a year,” Zentner said. “GDP may have missed estimates a bit, but it still suggests the economy is still strong. And as inflation continues to decline, it’s not overheating. Below, the data supports The Fed’s rate cut plan.”
The market currently expects the Fed to cut interest rates by 25 basis points next week after a more than 50 basis point cut in September, which was the first rate cut in four years. As of Wednesday, traders are pricing in a 94.6% chance of a 25 basis point cut, and a 5.4% chance that the Fed will keep rates unchanged, according to the CME FedWatch tool.
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That expectation has changed significantly over the past month — as of Sept. 30, traders saw just a 65.3% chance of a 25-point cut and a 34.7% chance of a second 50-point cut, per CME FedWatch.