General Motors strike to dent U.S. October job growth

WASHINGTON (Reuters) – A strike by General Motors (GM.N) workers should weigh on U.S. job growth in October, government data showed on Friday.

FILE PHOTO: GM team leader Natalie Walker, 56, leads chants as General Motors assembly workers and their supporters gather to picket outside the General Motors Bowling Green plant during the United Auto Workers (UAW) national strike in Bowling Green, Kentucky, U.S., September 20, 2019. REUTERS/Bryan Woolston/File Photo

The Labor Department’s monthly strike report showed 46,000 General Motors employees were idle at the automaker’s plants in Michigan and Kentucky during the October payrolls count. Striking workers who do not receive a paycheck during the period are treated as unemployed.

The figure published by the government is only for striking workers. The GM strike by members of the United Auto Workers (UAW) union started on Sept. 16, with ripple effects on the auto industry that economists said bumped up claims for unemployment benefits early in October.

The strike depressed manufacturing output in September.

Drawing comparisons with the 1998 strike at GM, economists expect the current work stoppage to cut off between 75,000 and 80,000 jobs from October nonfarm payrolls. The estimates include industry layoffs related to the GM strike.

“The effects of this strike would wipe out most of September’s job growth,” said Brad McMillan, chief investment officer at Commonwealth Financial Network. “This is a crash we can see coming, but it is one that will be temporary.”

The government will publish its closely watched employment report for October next Friday. Payrolls increased by 136,000 jobs in September, below the monthly average of 161,000 this year. The three-month average gain in private employment fell to 119,000, the smallest since July 2012, from 135,000 in August.


GM and the UAW reached a tentative deal last week. The union said workers would stay off the job while they vote on the proposed four-year contract. Voting that could end the strike was expected to conclude on Friday.

According to a preliminary Reuters survey of economists, payrolls likely increased by 90,000 jobs in October. The household survey from which the unemployment rate is derived would likely consider the striking workers as employed. Still, economists are forecasting the unemployment rate rising to 3.6% this month from a near 50-year low of 3.5% in September.

Though payrolls growth is likely to pick up again, the small monthly gain could still rattle financial markets already on edge following a raft of weak data, including September retail sales, durable goods orders and manufacturing production. Collectively, these reports have cast a shadow on the longest economic expansion on record.

The expansion, now in its 11th year, is being hamstrung by a 15-month trade war between the United States and China, which has eroded business confidence and weighed on business investment.

A strike by public school teachers in Chicago could temper expectations for a rebound in job growth in November.

“If the 25,000 Chicago teachers are still on strike next month, the bounce-back in November payrolls will look a little more muted,” said Paul Ashworth, chief U.S. economist at Capital Economics in Toronto.

Reporting By Lucia Mutikani; Editing by Chizu Nomiyama, Andrea Ricci and David Gregorio

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