October brought a significant "employment shock" as large hurricanes struck the U.S. close to the election, resulting in the smallest increase in new jobs in nearly four years.

On November 1st, the U.S. Department of Labor reported that non-farm payrolls grew by only 12,000 in October, the smallest growth since December 2020, when the pandemic had severely impacted employment. This figure is far below Wall Street’s forecast of 110,000 new jobs.

Job growth figures for August and September were also revised downwards, with August’s increase reduced from 159,000 to 78,000 and September’s from 254,000 to 223,000—a combined downward revision of 112,000 jobs.

Last month, employment figures exceeded expectations, suggesting strong hiring. However, October’s low growth rate now raises concerns over a potential economic downturn and a slowdown in the labor market.

There are, however, cautions against overinterpreting October’s job data. By industry, the manufacturing sector lost 46,000 jobs, with a notable 44,000 job loss in transportation equipment manufacturing due to strikes, according to the Labor Department. Boeing, classified as transportation equipment manufacturing, was notably affected.

Meanwhile, the unemployment rate held steady at 4.1%, matching September’s rate and in line with expert predictions. Average hourly wages grew 0.4% from the previous month, above the forecast of 0.3%, and the annual growth rate matched expectations at 4.0%.

With just four days before the election, the “employment shock” data has garnered attention for its potential impact on voter sentiment. However, some analysts believe the impact will be limited, given that factors like hurricanes and strikes are temporary, and the unemployment rate remains low.

Following the release of October’s employment data, bond yields, which had been rising, declined. According to the trading platform Tradeweb, the yield on the benchmark 10-year U.S. Treasury fell to 4.26%, down by 2 basis points from the previous day’s closing. The 2-year Treasury yield, which is sensitive to monetary policy changes, dropped by 4 basis points to 4.12%.