There was lots of discussion leading up to the monthly job report due to the hurricanes and ongoing Boeing strike occurring during October. No one was quite sure how these situations would play out in the labor market. There was a growing list of exceptions to use in case the data was weak, which proved useful in the end. The U.S. added 12,000 jobs in October, far below the 223,000 estimate and the lowest addition since the end of 2020. The Labor Department added a disclaimer to the report that the number of people responding to the data collection survey was “well below average” and “it is not possible to quantify the net effect” of the hurricanes on the monthly change. However, over 500,000 respondents replied they were unable to work due to weather and almost all of the 46,000 jobs lost in manufacturing were due to the Boeing strike. Healthcare and government accounted for the bulk of hiring in October, with the other major industries either losing jobs or adding a minimal amount. The two-month revision took away 112,000 jobs from earlier totals and suggests the labor market may be weaker than previously thought. It is difficult to make a decisive judgment on the labor market at this time with all the October variables in place.

KEY INDICATORS THIS WEEK

GDP – The U.S. economy grew at another healthy pace in the third quarter, 2.8%, even though it fell short of the 3% pace in the second quarter. Almost all sectors of the economy added to the growth. Only trade and residential investment, i.e., housing, were shortfalls. Consumer spending, the largest share of GDP, rose 3.7%, the best pace since the first quarter of 2023. Business spending was up 3.3%, lower than expected due to a 4% decline in structure spending. However, spending on equipment was the strongest in over a year, suggesting companies are adding computers and peripheral equipment as they gear up for the use of artificial intelligence. Government spending rose 5%, the largest increase since 2021.The bulk of the rise was in defense spending, up 14.9%, the most since 2003. On the trade side, while both imports and exports rose between July and September, the pace of imports exceeded exports, creating a drag on trade.

What's Next – If October wasn’t volatile enough, next week will surely provide another dose of excitement. Within two days of each other, we will receive the country’s decision on a new president and the Federal Reserve’s decision on interest rates. Both have been hotly contested debates, although the presidential question will have a more long-term effect. According to the latest Bloomberg Markets Live Pulse survey, a victory for Trump would be more beneficial for stocks and Bitcoin relative to his Democratic opponent, while a Harris presidency would bring slightly more relief to housing costs. Some 38% of the 350 respondents see equities accelerating a year from now under the Republican candidate, versus 13% under the Democrat. The Fed is expected to cut rates by 25 basis points on Thursday.

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