Major disappointment with just 12,000 jobs in October: Key facts and figures in last report before election

The economy nearly stalled out in October, adding just 12,000 jobs, and the unemployment rate remained at 4.1%, the Bureau of Labor Statistics reported Friday.

Investors had expected job growth to slow to 108,000, in part because of damage from hurricanes and a strike at Boeing, but the report was even worse than expected.

The report, coming just days before voters decide whether to elect Vice President Kamala Harris or former President Donald Trump, was the worst since 2020, when the economy was clawing its way out of the pandemic. For the first time since the pandemic, the private sector shed jobs, losing 28,000. Headline employment growth was positive only because government employment grew by 40,000.

The interpretation

Dan North, a senior economist with Allianz Trade Americas, said that even when factoring in Hurricane Milton and the Boeing strike, the jobs report was still bad.

“That’s pretty weak. So it is a big miss to the downside,” North told the Washington Examiner. “I think the Fed has got to cut next week. I think that's pretty well baked. The markets have been expecting that for so long.”

What it means ... for Harris

The surprisingly weak job growth in October is bad news for Harris, whose political fortunes are tied to the economy’s performance under President Joe Biden, who is suffering from high disapproval ratings. 

It’s too late to change many voters’ perceptions of the economy. Yet the race appears to be extremely close in the swing states, meaning that any news that sways even small numbers of voters could make a difference.

What it means for ... the Fed

With job growth slowing over the past few months, the Federal Reserve is likely to take Friday’s report as a sign it should proceed with a cut in its interest rate target next week. 

The Fed cut its target interest rate in September by half a percentage point, a large rate cut by historical standards. Investors expect a further rate cut of a quarter percentage point next week as the Fed tries to encourage spending by households and businesses to prevent a broader economic downturn.

The underlying reality

October’s report suggested the labor market may be turning, although it is important not to read too much into any one jobs report. The payroll numbers bounce around from month to month and are revised in subsequent reports. 

Instead, it is helpful to look at the trend. The three-month moving average of job gains plunged in October to 104,000, below the rate needed to keep up with population growth.

Roughly 112,000 new payroll jobs are needed each month to keep unemployment from rising, according to the Federal Reserve Bank of Atlanta. Note, though, that a separate estimate that takes into account the full extent of recent immigration puts the number as high as 200,000.

Prime-age employment, relative to the overall population, is strong by historical standards.

Recession watch

The unemployment rate, taken from the jobs report's household survey, is still low by historical standards. It held steady in October after creeping up over the past year.

Recessions entail a rising unemployment rate.

Friday's data suggest the U.S. labor market no longer triggers one major recession indicator — namely, when the three-month moving average of the unemployment rate rises half a percentage point relative to its minimum point over the past year. This indicator, known as the Sahm Rule, signaled the start of all postwar recessions.

The indicator had been triggered in recent months but is no longer signaling a recession.

Industries to watch

The leisure and hospitality sector in the past few months has finally exceeded the employment levels it reached in February 2020, right before restaurants and bars were forced to shut down across the country.

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Construction employment has remained robust, even as the housing market has taken a massive hit over the past few years as mortgage rates have soared alongside the Fed's rate hikes. That's in part because of a huge backlog of construction of multifamily housing over the past year. Economists will watch closely for any sign of slowing hiring in construction.

Unemployment rates by race and ethnicity

The household survey also includes unemployment rates by race and ethnicity. Rates for all groups neared record lows in the past few years. After drifting up in recent months, unemployment rates rose for white workers but fell for Asian workers in October.