Business

Hurricanes and Strikes Threaten to Stall US Job Growth as Election Nears

In October, US job growth faces challenges from hurricanes and labor strikes, impacting key sectors as Americans prepare to vote. Experts assess the labor market and job outlook.

As the U.S. approaches election day, economic factors such as job growth are under close scrutiny. This October, the job market faces unique disruptions from hurricanes and widespread labor strikes, which economists believe could influence the final employment report before Americans head to the polls. The Labor Department’s upcoming report, which analysts anticipate will reveal a slowdown, will provide critical insights into the strength of the U.S. job market and its capacity to withstand these challenges. Short-term economic volatility may shape voter perceptions of economic stability as they prepare to make pivotal choices.

Hurricanes and Strikes Disrupt October’s US Job Growth

In October, U.S. job growth is expected to show a significant downturn. Hurricanes Helene and Milton, which struck the Southeast and Florida, respectively, led to temporary industry closures and operational halts, affecting payroll numbers across affected regions. The hurricanes disrupted transportation, construction, and hospitality sectors, with many businesses unable to operate or meet full staffing levels. Additionally, labor strikes have been a further strain on payroll growth, especially in major sectors such as aerospace, hospitality, and manufacturing.

According to economists’ estimates, only around 113,000 new nonfarm payroll jobs are likely to be reported in October, a substantial decrease from September’s 254,000 gain, as highlighted by Reuters. Job creation projections vary widely, from no new jobs added to a potential 200,000. Stephen Stanley, Chief U.S. Economist at Santander Capital Markets, notes that sectors like restaurants and retail, which rely heavily on hourly employees, are particularly vulnerable to these disruptions, as workers in these fields often see a direct impact on their paychecks during temporary closures.

Labor Strikes Amplify Volatility in US Job Growth

In addition to natural disasters, labor strikes have intensified job market fluctuations, contributing to the challenges facing US job growth. During October’s survey period, Boeing’s 33,000 machinists and Textron’s 5,000 aerospace workers went on strike, coinciding with the Bureau of Labor Statistics’ critical 12th of the month survey date. Hotel workers in California and Hawaii also walked off the job, leaving numerous positions temporarily vacant. According to federal guidelines, employees on strike and without pay during the survey period are classified as unemployed for payroll reporting, which may artificially reduce October’s job figures.

Economic analysts predict that these combined effects of storms and strikes may have removed between 70,000 and 100,000 jobs from October’s overall count, with significant reductions in manufacturing, construction, retail, and hospitality sectors. This degree of labor market disruption has prompted concern among some experts, who warn that the impacts on these sectors could extend beyond October if hurricanes and labor actions continue.

US Job Growth Resilience Despite Temporary Disruptions

Despite these obstacles, the national unemployment rate is projected to hold steady at 4.1%, underscoring the resilience of the broader labor market. Economist Rachel Sederberg from Lightcast points out that this stability highlights structural strength within the labor market, even when temporary factors create volatility. Although Boeing’s labor strike might lead to a slight uptick in the unemployment rate due to temporary layoffs, experts do not interpret this as indicative of a broader labor market downturn. Additionally, the Bureau of Labor Statistics notes that workers unable to perform their duties due to extreme weather are counted as “with a job but not at work,” adding nuance to the data.

Federal Reserve’s Response to US Job Growth Trends and Wage Patterns

The Federal Reserve’s upcoming policy meeting will likely consider October’s employment data as it contemplates adjustments to interest rates. Analysts expect a 25-basis point rate cut next week, aimed at stabilizing markets in light of recent employment volatility. The Fed’s benchmark rate, currently between 4.75% and 5.00%, was previously cut by half a percentage point in September. Layoff rates remain historically low, which, combined with wage compression, suggests that companies are adapting without resorting to large-scale job cuts.

Wage Growth in a Resilient US Job Growth Market

Average hourly earnings in October are forecasted to rise by 0.3%, slightly down from September’s 0.4% increase. With an expected annual wage growth of 4.0%, steady wage gains reflect moderate hiring and retention trends, as well as a balanced labor supply. Cory Stahle, an economist at Indeed, emphasizes that while some sectors might experience a cooling effect, most job seekers continue to find a favorable employment landscape.

Conclusion

As the last employment report before the election, October’s job numbers will highlight how hurricanes, strikes, and potential federal rate changes are influencing US job growth. While these factors may temper immediate job growth, long-term labor trends remain positive, providing a complex yet stable backdrop as voters and policymakers assess the economy.