How The General Motors Strike Could Impact October Jobs Numbers

This is a big week on the economic calendar for U.S. investors, with the Federal Reserve interest rate decision expected on Wednesday and the October jobs number due out on Friday.

Economists are looking for U.S. nonfarm payroll growth to drop from +135,000 in September to +105,000 in October. It’s rare that one company could have an impact on the overall jobs number, but some analysts are saying investors shouldn’t read too deeply into Friday’s headline jobs number due to the General Motors Company GM strike.

Commonwealth Financial Network chief investment officer Brad McMillan said last week the GM strike has been big enough to potentially make the overall October jobs number an outlier.

GM Strike Numbers

Directly, the GM strike impacted 48,000 employees, but McMillan said it likely had a much larger indirect impact as well. He estimates there could be up to 200,000 additional workers at GM suppliers that were impacted, including at least 12,000 that have already made unemployment claims.

Looking back to the last GM strike in 1998, payrolls decreased by 132,000 as a result.

McMillan says the auto industry employs far fewer workers than it did 20 years ago, but investors should still understand the strike’s potential impact.

“It is easy to see how the strike could take job growth down significantly, even into negative territory,” McMillan said.

Fortunately for investors, the GM strike was resolved on Friday, but the United Auto Workers is now reportedly shifting its attention to negotiations with Ford Motor Company F and Fiat Chrysler Automobiles NV FCAU.

Benzinga’s Take

If economists and investors aren’t factoring in the full potential impact of the GM strike, the market could initially take a hit on Friday following a jobs growth miss. With the GM strike already resolved, any knee-jerk drop in index funds like the SPDR S&P 500 ETF Trust SPY could be potential buying opportunities.

Do you agree with this take? Email feedback@benzinga.com with your thoughts.

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