Last month, most economists were impressed with a very strong jobs report for September that called into question whether or not the labor market was really declining, as seemed to be the case in the summer.

October’s jobs report, released this morning, suggests that the earlier view of a modest decline was correct, and that last month was the fluke.

Payrolls rose by only 12,000 last month. When one adjusts for the likely dampening effects of hurricanes Helene and Milton as well as the Boeing strike, payrolls would have risen about 100,000 – still quite weak by recent standards, though certainly not suggesting an imminent downturn.

On the payroll side, increases in health care (52,000) and government jobs (40,000) were offset by declines in temp employment (-49,000) and manufacturing (-46,000). The latter two numbers are known to be quite sensitive to the business cycle. Payrolls in other key sectors of the economy – such as construction, wholesale and retail trade, other professional services and leisure and hospitality – were all flat.

Large downward revisions in payroll growth for August and September showed these months were also weaker than previously thought. The average of payroll growth over the past three months is now 104,000 – and, absent the hurricanes and Boeing strike, would have been about 130.000. Wage growth continued at about a 4% rate – which, given recent productivity growth (of over 2%), gives workers a nice boost in pay but is not inflationary.

On the household side, the unemployment rate held steady. But the number of employed workers dropped by 368,000, reducing the employment rate in the population from 60.2 to 60.0 percent; the number of workers in the labor force also dropped by over 200,000. These declines were most heavily concentrated among white women. The number of job losers in the labor market also rose by 167,000 to 3.4 million. The combination of little new hiring, declining employment and rising job loss suggests a market that is less hospitable to workers seeking new jobs.

Overall, it is fair to say that the labor market picture looks quite mixed. GDP growth in the third quarter of 2024 was 2.8%, suggesting that the economy remains strong. The employment reports over the past three months, including this one, have bounced around a great deal – with payroll increases of 78,000 (quite weak), 223,000 (very strong), and now 12,000 (also quite weak – even allowing for the hurricanes and strike) in August, September and October respectively. To be clear, the economy is not going over a cliff – but the job market seems to be on a path that is modestly downhill. And perhaps employers are waiting until after Election Day to indicate their future plans more clearly.

When the Federal Open Market Committee meets late next week, a rate cut of 0.25% seems very likely, while policymakers wait for more numbers before the December meeting. In the meantime, a clearer picture from the labor market hopefully will emerge soon.