US nonfarm payrolls collapse in October but economists see the slowdown as transitory

US non-farm payrolls numbers shocked by only 12K new jobs created in October, compared to forecasted increase by 103K and downwardly revised September’s figure from 254K to 223K.

The unemployment rate was unchanged at 4.1% while average earnings ticked higher, rising by 0.4% last month from 0.3% in September.

Although data showed that job growth was near stall in October, in the most unwanted time, just days ahead of the US election, economists mainly see it as a temporary phenomenon, sparked by the impact of hurricane and strikes in the aerospace industry which significantly slowed employment in manufacturing sector.

Economists also share the opinion that very disappointing labor numbers do not indicate that the economy has significantly weakened and is in danger of falling into recession.

Separate reports showed that most jobs added in October were in the healthcare and government sectors after hurricane Helene devastated the US Southeast in late September and Hurricane Milton hit Florida a week later, causing over half a million people not being able to go to work due to extreme weather.

Markets now fully focus on key events – November 5 vote on US presidential election and November 7 FOMC interest rate decision.

Market observers widely expect the US central bank to cut interest rates by 25 basis points, after the policymakers opted for 50 basis points in the first rate cut since 2020 in September, the move mainly driven by significant increase in unemployment in July (4.3% from 3.8%).

The US dollar fell to one week low against its major peers in immediate reaction to the data, but quickly recovered losses after strong technical supports contained dip, as overall structure is bullish, and sentiment remains positive.