Job creation slowed in October to the weakest pace since late 2020 as the impact of the Southeast storms and a significant labor crisis hit employment.

Nonfarm payrolls rose by 12,000 this month, a significant decline from September and below the Dow Jones estimate of 100,000, the Bureau of Labor Statistics reported Friday. In an already expected negative report, October saw the smallest increase since December 2020.

However, the unemployment rate remained at 4.1%, as expected. A broader measure of unemployment that includes discouraged workers and those holding part-time jobs for economic reasons also remained unchanged at 7.7%.

In the reporting, the BLS noted that the Boeing strike likely caused 44,000 manufacturing jobs to be lost, for a total of 46,000 jobs lost.

Additionally, the report noted the impact of Hurricanes Helene and Milton, but said “it was not possible to quantify the net effect” of the storms on total jobs.

Elsewhere, the office said average hourly wages rose 0.4% for the month, slightly above estimates, although the 12-month increase of 4% was in line. The average weekly working time remained constant at 34.3 hours.

However, markets largely ignored the bad news as stock market futures on Wall Street looked set for a strong start while Treasury yields slumped. Meager employment numbers and wages that are roughly in line with expectations are helping to solidify another rate cut by the Federal Reserve next week.

“At first glance, the October jobs report paints a picture of increasing fragility in the U.S. labor market, but beneath the surface lies a muddy report confounded by climate and labor disruptions,” said Cory Stahle, economist at Indeed Hiring Lab. “While the impact of these events is real and should not be ignored, they are likely to be temporary in nature and not a signal of a labor market collapse.”

The release comes just days before the presidential election, which pits Democrat Kamala Harris and Republican Donald Trump in a race that most polls show is deadlocked. With the economy on the front lines of the fight, the easy jobs numbers “cast a bleak shadow over next week,” said Lisa Sturtevant, chief economist at Bright MLS.

The weak October report also contained significant downward revisions compared to previous months. August only saw an increase of 78,000, while the original estimate for September fell to 223,000. Taken together, the net revisions reduced the previously reported total number of jobs created by 112,000.

Health care and government again led the way in job creation, with 52,000 and 40,000 jobs, respectively. However, there were job losses in several sectors.

In addition to the expected decline in manufacturing, there was a decline of 49,000 in ancillary services. The category is sometimes viewed as an indicator of underlying employment strength and has seen a decline of 577,000 since March 2022, according to the BLS.

Another leading sector, leisure and hospitality, saw a decline of 4,000, while retail and transport and warehousing also reported slight declines.

In the household survey used to calculate the unemployment rate, hiring figures were even weaker.

This showed that 368,000 fewer people reported keeping a job and that the workforce shrank by 220,000. Full-time employment fell by 164,000, while part-time employment fell by 227,000.

The report covers a month in which Hurricanes Helene and Milton devastated the Southeast – particularly Florida and North Carolina – while the Boeing strike also hit a previously buoyant, if declining, labor market. Recent developments suggest that the impasse at Boeing may soon be over.

Before the release, new jobs added averaged nearly 200,000 per month in 2024, about 60,000 below the pace in the same period a year ago, still indicating a solid pace of hiring.

Some cracks in recent months have raised concerns at the Federal Reserve that while inflation is slowing year-over-year, an increased interest rate could have an impact on the labor market and threaten continued economic growth.

As a result, policymakers in September took an unprecedented step for a growing economy, cutting their key short-term interest rate by half a percentage point, double the usual quarter-point moves the Fed usually likes to make.

Financial markets are pricing in a high probability that the central bank will cut interest rates by a quarter point at each of its two remaining meetings this year. The Federal Reserve's rate-setting Federal Open Market Committee will announce its decision next Thursday.