GM strike could make October jobs report look bad
America’s still-strong labor market probably took a hit in October. Although the slowing economy and the trade war might have hurt job creation, Friday’s jobs report will be all about General Motors.
The jobs report will serve as a barometer for how much the 40-day General Motors strike weighed on the economy. The US Bureau of Labor Statistics will release its jobs report at 8:30 am ET Friday.
Economists surveyed by Refinitiv expect only 89,000 jobs were added to the US economy in October, down from 136,000 the prior month.
That would be the slowest monthly job growth since May. But October might just be a one-month hiccup.
The GM strike, which began in late September, took 50,000 striking autoworkers out of the job market. It also hit the company’s suppliers, which could have temporarily taken about 200,000 workers out of their jobs at times during the strike, according to Brad McMillan, chief investment officer for Commonwealth Financial Network.
That means the GM strike could reduce the October payroll number by around 60,000 workers, according to Jefferies economists Ward McCarthy and Thomas Simons.
There is an outside chance the US economy could have lost jobs in October, which would be the first time that happened since September 2010. Although unlikely, economists are already taking October’s data with a grain of salt.
“Some months are just bad, while other months are just good — and usually it doesn’t matter,” said McMillan.
The good news is the GM strike’s effect will be temporary: Most of the damage that the GM strike has done to the labor market will be reversed now that it has ended, and job growth should tick up again in November.
The unemployment rate should tick up to 3.6% in October, according to consensus estimates, after dropping to 3.5% last month, its lowest level since December 1969. Average earnings are expected to improve slightly from September. That bodes well for consumer spending, as the holiday shopping season gets going.
One month of noisy data aside, some economists remain concerned that the pace of job growth is slowing.
“Even though much of the expected October slowdown will likely be due to temporary factors, we don’t want to ignore the impact the trade fight is having on business job decisions,” said Beth Ann Bovino, US chief economist for S&P Global Ratings.
Further weakness in the manufacturing sector could “cloud the October jobs report as it suggests that manufacturers may soon be planning workforce reductions,” said Bovino.
Although the US economy is slowing, investors are more concerned about global growth issues, said Robin Anderson, senior global economist at Principal Global Investors. America is still the best-performing economy among its peers, and one month of slower job growth won’t change that.