- The government Friday reported that 46,000 GM workers were out of work due to the strike against the company.
- Economist say that number will count one-for-one against the October payrolls number, and the consensus for October employment growth is now just 90,000 jobs.
- That would include head count reductions at General Motors suppliers as well.
- Bank of America Merrill Lynch economists expect a much lower October report, with just 25,000 jobs due to the loss of nearly 150,000 to 200,000 workers from GM and related companies.
October's employment report is expected to show job growth of just 90,000 workers, due to the impact of the strike at General Motors on the company's payroll and those of its suppliers.
According to Refinitiv, the consensus of 90,000 total jobs reflects a decline of 50,000 manufacturing jobs. The Labor Department Friday reported that a total of 46,000 General Motors employees were out of work, due to the near six week long strike.
Members of the United Auto Workers were continuing to vote Friday afternoon on a tentative contract, which was expected to be approved.
The October employment report will be released next Friday at 8:30 a.m. ET.
Bank of America Merrill Lynch economists expect the report to show just 25,000 total jobs were added in October, compared to September's 136,000 jobs, which was weaker than expected. They expect the unemployment rate to remain at 3.5%.
If the October report meets the consensus target, it would be the slowest job growth since May's 62,000 jobs, but if Bank of America's estimate is correct, it would be the most sluggish growth since the September, 2017 report of 18,000 jobs. Hurricanes impacted the employment report that month.
"The direct impact from the GM strike is 46,000. That's a one-for-one reduction in the level of payrolls. On top of that, there are secondary impacts in the GM supply chain, primarily upstream from them— a lot of auto parts manufacturers and other kinds of primary metals companies," said Bank of America economist Joseph Song. "A lot of those factories are shuttered. If you add that up, you're looking at 150,000 to 200,000 reduction in payrolls."
Song said the forecast is consistent with the impact from the 1998 strike by 10,000 GM workers, which resulted in the decline of 167,000 in durable goods manufacturing payrolls. Total job growth in July of that year was 126,000, down from 232,000 the prior month.
"We would have been closer to 125,000, 150,000" for October job growth without the strike, Song said.