Key takeaways
- In October 2024, the U.S. economy added only 12,000 jobs, marking the slowest growth since 2020. This figure fell significantly short of the anticipated 100,000 increase and the 223,000 jobs added in September. Additionally, job gains for August and September were revised downward by a total of 112,000.
- Despite this slower than expected growth, we aren’t overly concerned. We had expected there would be heavy data distortions due to the recent hurricanes and the dockworkers’ strike.
- The unemployment rate held steady at 4.1% and wage growth edged higher, up 0.4% month-over-month and 4% year-over-year. This suggests that the labor market remains firm despite signs of weakening.
- Our strategists believe that the underlying softness in the October jobs report, coupled with recent soft inflation data, will keep the Federal Reserve (Fed) on its programmatic rate-cutting cycle, regardless of the upcoming U.S. presidential election results. They maintain their forecast that the Fed will reduce its policy rates by 25 basis points in both its November and December meetings.
Contributors
Cristina Dwyer
Analyst, J.P. Morgan Wealth Management
In October 2024, the U.S. economy added only 12,000 jobs, marking the slowest growth since 2020. This figure fell significantly short of the anticipated 100,000 increase and the 223,000 jobs added in September. Notably, the response rate in the Establishment Survey (which collects data on employment, hours and earnings of nonfarm payroll employees) was the lowest since January 1991,1 which may have impacted the reports’ ability to capture the full employment picture.
The August and September jobs reports were revised lower, down by 81,000 and by 31,000, respectively.2 Despite this slower than expected growth, our strategists aren’t overly concerned. They had anticipated there would be heavy data distortions due to the recent hurricanes and the dockworkers’ strike.
Additionally, this report follows recent stronger than expected economic data, revealing that the U.S. economy staged robust growth in the third quarter. These developments further solidify our view that the economy is gradually cooling, but remains firm.
U.S. nonfarm payroll employment
In thousands
This chart shows the monthly nonfarm payroll employment change in thousands from April 2023 to October 2024. The chart has two lines representing the 3-month moving average and 2018-2019 average monthly change at the level of 178,000.
- In April 2023, the nonfarm payroll was 278,000, 3-month moving average was 237,000;
- In May 2023, the nonfarm payroll was 303,000, 3-month moving average was 273,667;
- In June 2023, the nonfarm payroll was 240,000, 3-month moving average was 273,667;
- In July 2023, the nonfarm payroll was 184,000, 3-month moving average was 242,333;
- In August 2023, the nonfarm payroll was 210,000, 3-month moving average was 211,333;
- In September 2023, the nonfarm payroll was 246,000, 3-month moving average was 213,333;
- In October 2023, the nonfarm payroll was 165,000, 3-month moving average was 207,000;
- In November 2023, the nonfarm payroll was 182,000, 3-month moving average was 197,667;
- In December 2023, the nonfarm payroll was 290,000, 3-month moving average was 212,333;
- In January 2024, the nonfarm payroll was 256,000, 3-month moving average was 233,667;
- In February 2024, the nonfarm payroll was 236,000, 3-month moving average was 264,667;
- In March 2024, the nonfarm payroll was 310,000, 3-month moving average was 267,333;
- In April 2024, the nonfarm payroll is 108,000, 3-month moving average was 218,000;
- In May 2024, the nonfarm payroll is 216,000, 3-month moving average was 211,333;
- In June 2024, the nonfarm payroll is 118,000, 3-month moving average was 147,333;
- In July 2024, the nonfarm payroll is 144,000, 3-month moving average was 159,333;
- In August 2024, the nonfarm payroll is 159,000, 3-month moving average was 140,333;
- In September 2024, the nonfarm payroll is 158,993, 3-month moving average was 153,998;
- In October 2024, the nonfarm payroll is 159,005, 3-month moving average is 158,998.
Source: Bloomberg Financial L.P. Data as of November 1, 2024.
Industry breakdown
In October, the increase in nonfarm payrolls was primarily fueled by sustained growth in the health care (+52,000) and government (+40,000) sectors.3
Employment in all other sectors remained little changed or negative. Retail trade, transportation and warehousing, and leisure and hospitality jobs were adversely affected by weather related disruptions. These disruptions drove a reduction of 49,000 temporary help services jobs within the professional and business services sector. Since peaking in March 2022, temporary help services jobs have decreased by a total of 577,000.4
Hurricane Helene and Hurricane Milton both struck during the reference period for the October nonfarm payrolls report, making landfall on September 26 and October 9, respectively. According to the Bureau of Labor Services (BLS), these hurricanes “caused severe damage in the southeast portion of the country,” which “likely” impacted the payroll data – although, the BLS expressed “it is not possible to quantify the net effect.” 5 Our heartfelt sympathies go out to all those affected by these devastating storms.
Manufacturing jobs (–46,000) posted the largest decline since April 2020. This downturn was largely attributed to a decrease of 44,000 jobs in the transportation equipment manufacturing sector. 6 The decline was primarily driven by the ongoing dockworkers’ strike, which disrupted trade on the U.S. East and Gulf coasts.
Employment in construction, mining, wholesale trade and other major industries were little changed. 7
Unemployment rate
The unemployment rate held steady at 4.1% in October, with the number of unemployed individuals little changed at 7 million. These readings remain above the 3.8% unemployment rate and 6.4 million unemployed individuals from a year ago,8 reflecting labor market conditions have moderated since.
There was a slight increase in the number of individuals who permanently lost their jobs in October, marking the largest rise since February. The amount of individuals who were temporarily laid off and the long-term unemployed (those out of work for 27 weeks or more) showed little change.9
The labor force participation ticked down to 62.6% from 62.7% in September, indicating there are slightly fewer workers who are either employed or searching for jobs. The prime age employment ratio (i.e., workers aged 25 to 54) fell to 83.5%,10 the lowest rate since April.
Wage growth and average hours worked
Wage growth edged higher in October, with average hourly earnings up 0.4% month-over-month (MoM) and 4% year-over-year (YoY),11 matching the growth from the prior month.
Meanwhile, average hours worked remained unchanged at 34.3 hours in October.12 Coupled, these data points show pockets of strength in the labor market. The resilient wage growth should support consumer spending, and in turn, economic growth in upcoming months.
Rate implications
The October employment report serves as the final major economic data release before two pivotal events: the Federal Open Market Committee (FOMC) meeting on November 6–7 and the U.S. presidential election on November 5. At the September FOMC meeting, the Federal Reserve lowered interest rates by 50 basis points to bolster economic growth.13 The Federal Reserve’s decision exhibits a shift in their priorities, from easing inflation, which is notably closer to the Fed’s 2% target, to supporting the labor market.
Our strategists believe that the underlying softness in the October jobs report, coupled with recent soft inflation data, will keep the Federal Reserve on its programmatic rate-cutting cycle, regardless of the upcoming presidential election results. They maintain their forecast that the Fed will reduce its policy rates by 25 basis points in both its November and December meetings.
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