The U.S. added just 12,000 jobs last month, a figure economists said was impacted by two hurricanes and a strike.
It was the lowest figure since December 2020, during the height of the COVID-19 pandemic.
The Bureau of Labor Statistics said in its press release that the U.S. actually added no new net workers last month.
The unemployment rate remained unchanged at 4.1%
Analysts had forecast an increase of 110,000 jobs in October.
That number of jobs is a significant drop from the 254,000 reported in September, a figure that beat expectations. The forecast was that it was the product of the impact of two hurricanes that battered the Southeast last month, as well as the ongoing strike at Boeing.
“Unfortunately, it will not be easy to interpret the October jobs report,” Fed Board member Chris Waller said earlier this month. He said he expected Hurricanes Helene and Milton, which together caused an estimated $50 billion in damage across much of the U.S. Southeast, combined with the strike, to reduce job growth by more than 100,000.
Absent those problems, key economic data suggests the U.S. is in healthy financial shape heading into Tuesday’s election. The unemployment rate is still historically low at 4.1 percent, while inflation has effectively returned to the Fed’s annual target of 2 percent.
Yet many Americans are still feeling the pinch from years of rising prices. And while payrolls reports in recent months have come in above expectations, gains remain unevenly distributed.
Data from the Bureau of Labor Statistics shows that four primary sectors — private education and health care; leisure and hospitality; construction; and government — have accounted for the vast majority of job growth in recent months.
“Some have talked about a turnaround in the labor market, a rebound, a warming — but other labor market data doesn’t point in that direction,” said Julia Pollak, chief economist at ZipRecruiter.
Even with the Fed’s rate cut, Pollak said, “activity is likely to pick up in one sector at a time.”
Two major sectors that historically have seen more sustainable economic growth — business and professional services and manufacturing — have seen hiring stall, though each has a different source for that stall.
In manufacturing, a push by the Biden administration to boost blue-collar jobs through targeted investments and tax breaks has been offset by high interest rates, making it less financially feasible for companies to invest in capital-intensive projects.
As interest rates fall, the sector could pick up some, Pollak said, but some economists now fear the Fed’s policy moves will take longer to translate into lower lending rates for companies. Key lending benchmarks like the 10-year Treasury note have so far held at similar levels as they have over the past two and a half years.
Meanwhile, hiring in business and professional services roles has fallen, a trend that has left many college-educated workers, who are historically accustomed to more stable employment prospects, in a state of uncertainty.
A Bureau of Labor Statistics report earlier this week showed that hiring in professional business services, excluding the immediate pandemic period, has fallen to levels last seen in October 2013, when the economy was just beginning to recover from the Great Recession.
Changes in that sector may be more structural, Pollak said, as many companies have invested in labor-saving technologies during the pandemic, including artificial intelligence, which could reduce the need for a traditional workforce.
Earlier this week, the U.S. Department of Labor reported that continuing claims for unemployment benefits have not declined significantly, though they are still at historically low levels at just over 1.8 million.
Still, the trend could spell further trouble for the labor market, according to economists at Citi.
“Continuing claims remain at levels higher than the same period last year, and a low hiring environment suggests claims could remain elevated,” they wrote in a note to clients on Thursday. “Without an increase in hiring, even moderate levels of job losses are likely to lead to an increase in the unemployment rate.”