The US economy added only 12,000 jobs in the month of October, below the 100,000 expected by economists. This underwhelming figure is heavily attributed to the impact of Hurricanes Helene and Milton on payroll estimates, and Boeing’s (BA) ongoing labor strike to some degree.
The unemployment rate held steady at 4.1% while average hourly wages grew 4.0% year-over-year, both data sets in line with economic forecasts. This concludes a big week for data ahead of the Federal Reserve’s November FOMC meeting next week, where officials could potentially push for another interest rate cut.
RSM chief economist Joe Brusuelas and Charles Schwab chief fixed income strategist Kathy Jones sit down with Yahoo Finance’s Morning Brief to dissect the details of this jobs report.
"This is all noise. It’s just distortions. Market will move on, so will the Fed. We’ll get that 25-basis-point cut November 7. But, hey guys, the US economy is in such a strong position now the Fed may choose to pause in December because they need to take a moment and ascertain if the growth path is meaningfully shifted up from the long-term trend growth rate of 1.8% that’s embedded in their forecasts to something that’s closer to between 2.5% and 3%," Brusuelas tells Seana Smith and Brad Smith.
Brusuelas expects the distorted "noise" in labor data to persist through the next jobs report: "And the December report now… that’s a much better indication of the true underlying fundamental strength of the American labor market."
This poises Jones to believe a December interest rate pause by the Fed to be "much more likely":
"And after that, the market’s already anticipating a much shallower path of rate cuts going forward by the Fed. And I think that that will be reflected in the next dot plot and the next SEP [summary of economic projections] as the Fed comes around to this view that perhaps, yeah, the economy due to productivity growth, due to underlying health in in the labor market, the economy is really growing closer to 3%."
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