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US nonfarm payrolls grew by only 12,000 in October—the smallest gain since 2020—in a month plagued by hurricane impacts and labor strikes. The unemployment rate held steady at 4.1%, but today’s October jobs report also showed substantial churn, with household employment declining by 368,000 and 428,000 individuals leaving the labor force.
Hurricane and strike distortions to payrolls were expected; Federal Reserve Board Governor Chris Waller noted in a recent speech that these factors “may reduce employment growth by more than 100,000 this month.” The Fed is likely to look through the noise ahead of next week’s FOMC meeting on November 6-7.
On top of other data this week that underscored the economy’s recent strength, October’s jobs report showed wage pressures continue to moderate. Elevated wages and high productivity have supported household incomes and consumer spending, helping to propel growth. With solid data in hand but some uncertainty about the labor market given October’s disruptions, we view a 25bp rate cute next week as the FOMC’s most likely move.
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