On the October Jobs Report: Blockbuster in Disguise?

12,000 net payrolls seems like a disaster, but it surely reflects the impact of Hurricanes Milton and Helene. BLS made no adjustments. The payroll survey had lower than unusual response, but it is not designed to report unemployment, including unemployment due to storms. The household survey had normal response rates, and reports 461,000 more unemployed due to weather than in the average October. So this seemingly horrible jobs report could be a blockbuster in disguise. It is impossible to precisely map results from the household survey to payrolls, but directionally, they confirm that storms are the cause of the low payroll gains. Prior months were revised down, with September still a blockbuster. The Sahm Rule reversed itself again, for the only time in history other than 1959, the one time the Rule’s recession call was wrong. Fed expectations are little changed, with 25 bp cuts at the November and December FOMC on track.