The October jobs report is expected to show job gains slowed significantly during the month as recent hurricanes and a strike by Boeing (BA) workers weigh on the labor market.
The monthly report from the Bureau of Labor Statistics, slated for release at 8:30 a.m. ET on Friday, is expected to show nonfarm payrolls rose by 105,000 in October while the unemployment rate held flat at 4.1%, according to consensus estimates compiled by Bloomberg. This would mark the lowest monthly number of job additions since December 2020.
In September, the US economy shocked Wall Street by adding 254,000 jobs, well above consensus estimates. The unemployment rate declined to 4.1%.
Here are the key numbers Wall Street will be looking at on Friday morning compared to the previous month, according to data from Bloomberg:
Nonfarm payrolls: +105,000 vs. +254,000 previously
Unemployment rate: 4.1% vs. 4.1% previously
Average hourly earnings, month over month: +0.3% vs. +0.4% previously
Average hourly earnings, year over year: +4% vs. +4% previously
Average weekly hours worked: 34.2 vs. 34.2 previously
Hurricane Milton made landfall in Florida on Oct. 9 during the survey week for the October jobs report, which "probably weighed on payrolls across the board, especially in leisure & hospitality," Bank of America US economist Shruti Mishra wrote in a note to clients.
Overall, Shruti's team believes the hurricanes and a strike at Boeing will lower payrolls by at least 50,000. Given that, Shruti argued a reading of around 100,000 job additions would still be a "solid print."
Considering the distortions expected in Friday's report, which also includes the impact of Hurricane Helene, RBC economist Michael Reid noted that the unemployment rate will provide the "cleanest read" on the labor market from the October jobs report.
"If we do see any weakness in the [unemployment rate], it will likely be due to something other than the hurricanes and striking workers," Reid wrote in a note to clients.
The report will be the last major economic release before the Federal Reserve's next policy decision on Nov. 7. As of Thursday, markets are pricing in a roughly 95% chance that the Federal Reserve cuts interest rates by 25 basis points next week, per the CME FedWatch Tool.
Some economists don't believe Friday's report will do much to change Fed officials' thinking on the health of the labor market given the expected distortions.
"One of the things that Powell has been pretty consistent on is this notion that we should be data dependent, but not data-point dependent," Jefferies US economist Thomas Simons told Yahoo Finance. "So if we do get a weaker payroll number tomorrow or an increase in the unemployment rate, I think that they would look through that."
Broadly, recent data outside the monthly employment report has shown a labor market that's gradually cooling. Data out Tuesday from the Bureau of Labor Statistics showed job openings fell to their lowest level since January 2021 during the month of September. Meanwhile, the quits rate, a sign of confidence among workers, fell to 1.9% in September, down from a revised 2% in August. This marked the lowest quits rate since June 2020.
"We see monetary policymakers as focusing on the broader trend of the jobs market having cooled substantially over the past year, and while not weak in an absolute sense, by many accounts is somewhat softer than prior to the pandemic," Wells Fargo senior economist Sarah House wrote in a research note.
