U.S. job growth decelerated markedly in October as hurricanes and strikes by aerospace workers curbed gains. Despite the slowdown, the unemployment rate remained at 4.1%, providing some reassurance that the labour market remains resilient ahead of Tuesday’s election.
Nonfarm payrolls rose by 12,000 last month, a sharp decline from September’s revised 223,000 increase, according to the U.S. Labor Department. Economists surveyed by Reuters had anticipated a gain of 113,000 jobs.
Market Reactions:
- Stocks: S&P 500 E-minis built on gains, up 0.43%.
- Bonds: The benchmark 10-year U.S. Treasury yield fell to 4.26%, with the two-year yield down to 4.11%.
- Forex: The dollar index dipped 0.02%.
Commentary:
Matt Bush, U.S. Economist, Guggenheim Investments (New York): “Given the impact of hurricanes, the Fed is likely to remain cautious, keeping all options on the table for a potential rate cut in December.”
Ben Vaske, Senior Investment Strategist, Orion Portfolio Solutions (Omaha, Nebraska): “While October’s job growth disappointed, the labour market appears to be weathering election uncertainty, strikes, and hurricanes. The Fed is still expected to proceed with a 25-basis point rate cut in November.”
Charlie Ripley, Senior Investment Strategist, Allianz Investment Management (Minneapolis): “This report reinforces mixed signals, with stagnant unemployment but weaker payroll growth. For investors, the focus will shift to next month’s data to assess any trend beyond the recent noise.”
Peter Cardillo, Chief Market Economist, Spartan Capital Securities (New York): “Despite hurricane and strike disruptions, this weak report hints at potential softness in the labour market. Rising hourly wages and a declining participation rate could prompt the Fed to consider further rate cuts by year-end.”
Helen Given, Associate Director of Trading, Monex USA (Washington D.C.): “The soft headline was largely anticipated, with traders approaching the numbers cautiously. Key concerns lie in net payroll revisions, which challenge September’s robust headline gains.”
Lindsay Rosner, Head of Multi-Sector Fixed Income, Goldman Sachs Asset Management: “October’s subdued job numbers reflect the effects of strikes and storms. The Fed will likely factor in these one-off events while considering a rate cut at its November meeting.”
Wasif Latif, President and CIO, Sarmaya Partners (Princeton, New Jersey): “The market’s reaction shows that weaker data increases the probability of rate cuts, which remains favourable for risk assets and bonds despite short-term volatility.”
Bryon Anderson, Head of Fixed Income, Laffer Tengler Investments (Scottsdale, Arizona): “The report’s noise, influenced by strikes and hurricanes, complicates the interpretation. Stable unemployment suggests resilience, while earnings growth supports continued economic confidence.”
Brian Jacobsen, Chief Economist, Annex Wealth Management (Menomonee Falls, Wisconsin): “The employment report is clouded by uncertainties from hurricane impacts. Fed policymakers are likely to treat this data cautiously, maintaining their course with a projected 25-basis point rate cut in November and another in December.”
Robert Pavlik, Senior Portfolio Manager, Dakota Wealth (Fairfield, Connecticut): “The report underscores a slowing economy amid external disruptions. The equity market appears unfazed, keeping the Fed on track for a rate cut.”
Bryce Doty, Senior Portfolio Manager, Sit Investment Advisors (Minneapolis): “This report dampens optimism from prior strong data, but we still expect a 25-basis point Fed cut next week, with shorter Treasury yields likely easing.”