We expect that Hurricane Helene and labor action at Boeing will distort the jobs data for October.
The employment report, which will be released on Nov. 1, will most likely be the first of two reports that will understate the true condition of the American labor market.
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We expect a top-line gain in total employment of roughly 120,000 jobs, which is approximately 80,000 below what our model would otherwise imply.
The drag on the top-line figure includes the impact of both Hurricane Helene that hit the Southeast and the Boeing machinists’ strike.
In our estimation the October report will not adequately capture the storm’s impact. That will have to wait until the November jobs report, which will be published on Dec. 6.
With the Boeing strike about to enter its seventh week, it is likely that the November report will also be distorted and we will not get a clean look at the labor market until the December or January reports.
We anticipate that the unemployment rate will increase to 4.2% in October and average hourly earnings will increase by 0.3% month over month, which would translate into a 4% year-over-year gain.
The Federal Reserve will look right past the next two weather-distorted reports and will remain on track to reduce its federal funds policy rate by 25 basis points at both its November and December meetings.
Given that the October jobs report is the final one before the upcoming election, it is critical that the proper context be put around it.
The top-line estimate will be distorted by the hurricane and the strike and should be interpreted as noise and not signal that the American labor market is at risk of a slowdown.
