If not for the government, it would have been a negative payroll print.

The October surprise may have arrived – albeit at the beginning of November. No, it was not some off-color remark or damning photo. Instead, it was a worse-than-expected October jobs report, from downward revisions to collapsing employment levels. The one golden nugget of today’s economic landscape may have cracked open.

Surprise! October Jobs Report

In October, the US economy added just 12,000 new jobs, falling far short of the consensus estimate of 113,000. While the establishment survey, which counts every job an individual has, revealed a tepid increase in employment levels, the household portion, which omits duplication, revealed 368,000 lost jobs.

The unemployment rate was flat at 4.1% for the second consecutive month. Average hourly earnings rose 0.4% after a downgraded 0.3% jump in September. They also rose to 4% year-over-year, up from 3.9% in the previous month. The labor force participation rate slipped to 62.6%, and average weekly hours were unchanged at 34.3.

The government and the government-dependent health-care sector accounted for virtually all the employment gains, adding 40,000 and 52,000 new positions, respectively. Construction added 8,000 to payrolls. Professional and business services declined by 49,000, and the manufacturing sector lost 46,000 jobs, reflecting the prolonged Boeing strike. Ultimately, private payrolls fell by 28,000. So, if it were not for the government, the country would have endured its first negative print since December 2020.

Who doesn’t love the smell of revisions in the morning? Anyone who has followed the monthly jobs report will enjoy that good whiff on the first Friday of the month. The Bureau of Labor Statistics revised the August employment data by 81,000, from 159,000 to 78,000. The September numbers were also adjusted lower by 31,000, from 254,000 to 223,000.

Here is a breakdown of other notable moments from the October jobs report:

• Full-time employment plunged by 164,000.
• Part-time jobs decreased by 227,000.
• The number of people working multiple jobs slipped from an all-time high to 8.305 million.
• US-born employment plummeted by 773,000 from October 2023.
• Foreign-born employment soared by one million.

Blame It on Helene and Milton?

Heading into the October jobs report, top White House economist Jared Bernstein warned of an abysmal reading amid the economic fallout from Hurricanes Helene and Milton and the labor action at US ports and Boeing. The Bureau of Labor Statistics offered a mixed reasoning for the putrid employment results:

“In October, the household survey was conducted largely according to standard procedures, and response rates were within normal ranges.

“The initial establishment survey collection rate for October was well below average. However, collection rates were similar in storm-affected areas and unaffected areas. A larger influence on the October collection rate for establishment data was the timing and length of the collection period. This period, which can range from 10 to 16 days, lasted 10 days in October and was completed several days before the end of the month.”

Put simply, yes and no.

Financial markets seem to think the October jobs report was a mere aberration from the overall employment trend: not hot, not cold, but just right. You know, the Goldilocks zone. The leading benchmark stock market indexes rallied to kick off November. US Treasury yields were mixed, and the US dollar changed little. A part of the reason for Wall Street not slipping into panic mode is that the Federal Reserve will keep cutting interest rates over the next two years, even if the trip downstairs is slower than expected.

Still, even if the hurricanes and Boeing strike are removed from the equation, the collapse in the household survey and the immense revisions should be enough to clutch nearby pearls, engage in some good old-fashioned hand-wringing, and howl at the moon.

An Election Surprise?

With only days until the November 5 presidential election, it continues to be the economy, stupid. Despite the mainstream media declaring “mission accomplished” thanks to Bidenomics, the public still largely views a putrid economic landscape driven by a high cost of living. The US labor market was the golden nugget for the current administration, but a colossal miss in the employment data could be another development working against Vice President Kamala Harris.