The US non-farm payroll report to be released this Friday is the last employment market report before the Federal Reserve's policy meeting next week, but this data will be difficult to interpret.

Floods and power outages caused by hurricanes Helena and Milton have paralyzed the operations of many businesses, which could affect the employment numbers in October. In addition, the US Bureau of Labor Statistics stated last week that as of October 12th (covering the survey week), 44,000 workers were on strike, with most of them working at Boeing.

In summary, the median forecast for October's employment increase of 0.11 million people is one of the smallest since the end of 2020, less than half of the increase in September. A survey of economists shows a wide range of forecasts for October's employment numbers, ranging from a decrease of 0.01 million to an increase of 0.18 million.

At this time, during the final sprint of the presidential election, it is unclear how American voters will interpret these warning-laden data. However, an unimpressive report could become additional material for former President Trump and Republicans who have vigorously criticized Democratic Vice President Harris on economic issues.

With inflation essentially moving towards the Fed's target, officials are now more focused on the gradually cooling labor market.

Mark Zandi, Chief Economist at Moody's, said policymakers will calmly respond to this data and continue to focus on lowering interest rates, as the current interest rate levels are widely believed to have a restraining effect on the economy.

Zandi said, 'It would take a very surprising employment or inflation data to make them abandon this policy direction. At this point, the threshold for them to not implement the interest-rate cuts policy they have explained to the market is quite high.'

Federal Reserve board member Waller recently stated that the employment report is 'not easy to interpret,' but he expects employment growth to decrease by more than 0.1 million due to hurricanes and the Boeing strike. The Federal Reserve has entered a pre-meeting blackout period, with expectations of a 25 basis point rate cut at this meeting.

Hurricane 'Helena' made landfall on September 26, while 'Milton' landed on October 9 - this is the week when the US Bureau of Statistics surveys businesses to collect non-farm data. However, according to Goldman Sachs's Ronnie Walker, the data within the survey week may not have a significant impact on October's non-farm data.

The employment report consists of two surveys, one targeting households and the other targeting businesses. Each survey has different criteria for measuring employment.

According to the survey of businesses, adverse weather must cause employees to stop work and pay for the entire pay period, including the 12th day, to result in a decrease in non-farm employment. Even if employees technically still have work, they will not be counted as employed. However, the household survey used to calculate the unemployment rate does not exclude these individuals. The household survey also reports the number of people who have work but did not go to work due to weather, so economists and Federal Reserve officials may rely more on this dataset.

According to Bloomberg's survey of economists, the unemployment rate is expected to remain at 4.1%. Regardless of the final outcome, the US Bureau of Statistics frequently comments on the impact of storms on data, and state-level data released two weeks later will show the effects in storm-hit areas such as North Carolina, Florida, and other states, helping to further clarify the data.

Bloomberg economists believe: 'We expect the October US non-farm report to show the first negative employment data since December 2020... Much of the weakness is weather-related disruptions, but we also see a slowdown in cyclical industries. Excluding transitory factors and adjusting for exaggerated sources, basic employment growth may fall below the speed required for a stable unemployment rate.'

In addition to the impact on the labor market, hurricanes may also have dampened overall economic growth in the early fourth quarter. Goldman Sachs's Walker stated that in the month of a natural disaster and the following month, economic growth typically cools down before rebounding.

He said: 'Hurricane Helena has the highest death toll since Hurricane Katrina, with nearly 10% of the US population included in major disaster declarations, estimated total material losses of around $90 billion, although this is still very uncertain.'

Goldman Sachs expects that due to the impact on industrial production, retail sales, and construction, the gross domestic product will decrease by 0.3 percentage points this quarter, then show a similar rebound at the beginning of 2025. With strong consumer and business spending driving force, the government will announce the initial estimate of the gross domestic product for the third quarter this Wednesday, with an expected annual growth rate of 3%, unchanged from the previous quarter.

Another set of data released on Tuesday shows that job vacancies in September fell to the lowest level since early 2021—when most of the impact of the two hurricanes had not yet been felt, and the number of job layoffs increased that month.

Editor/rice