US labor market hit by hurricanes

The data ...

In October, the US job market added 12,000 jobs. This was below expectations (consensus 110,000, Commerzbank 90,000). In addition, the figures for August and September were revised downwards to 78,000 and 223,000 respectively (previously reported: 159,000 and 254,000). The unemployment rate remained at 4.1%. Average hourly earnings increased by a surprisingly strong 0.4% compared to September. However, earlier data were revised downwards. In year-on-year terms, wages rose by 4.0% (as previously reported for September).

... and the background

After the surprisingly favorable employment report for September, we had already warned that one should not read too much into a single month's figure and that the “true” situation probably lies somewhere between the weaker data from the summer and the September figures. Indeed, today's report was softer again.

To be sure, the increase of 12,000 is distorted downward by strikes and storms. However, we estimate that both effects only account for a maximum of 50,000 each. The adjusted increase would therefore be only slightly above 100,000. In addition, the payrolls gains in August and September were revised downward by a total of 112,000.

Measured by the six-month average, the rise in employment is slowing down, even if October is excluded. This fits with other labor market data, such as the decline in job openings reported earlier this week. On the one hand, there is still no sign of a slump in the labor market, while on the other hand today's figures are likely to dampen speculation of a overheating of the US economy.

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