OCTOBER US EMPLOYMENT +151K

A better October and upwardly revised August and September which together added 110,000 employed people from what was originally reported. Private-sector payroll gains were revised up for the previous two months. Private employers added 107,000 jobs in September and 143,000 in August, compared to previous estimates showing gains of 64,000 in September and 93,000 in August.

  • Nonfarm payroll employment increased by 151,000 in October, and the unemployment rate was unchanged at 9.6 percent. The change in total nonfarm payroll employment for August was revised from -57,000 to -1,000, and the change for September was revised from-95,000 to -41,000.
  • Private-sector payroll employment rose by 159,000 over the month. Gains were concentrated in health care (+24k), retail trade ((+28k) and food services (+24k).
  • Employment in manufacturing changed little in October (-7,000) and, on net, has essentially been flat since May.
  • Elsewhere in the private sector, employment in construction, wholesale trade, transportation, information, and financial activities showed little change in October.
  • Government employment overall was little changed in October. Employment in local government, excluding education, decreased by 14,000  over the month. The  number of temporary decennial census workers fell by 5,000 in October. 
    After peaking at 564,000 in May, there were only about 1,000 temporary  decennial census workers remaining on Federal payrolls in October.

The average workweek for all employees on private nonfarm payrolls increased by 0.1 hour in October to 34.3 hours. The manufacturing workweek for all employees also increased by 0.1 hour, to 40.3 hours, while factory overtime was unchanged at 3.0 hours. The average workweek for production and nonsupervisory employees on private nonfarm payrolls increased by 0.1 hour to 33.6 hours in October. In October, average hourly earnings of all employees on private non-farm payrolls increased by 5 cents to $22.73. Over the past 12 months, average hourly earnings have increased by 1.7 percent. Average hourly earnings of private-sector production and nonsupervisory employees rose by 7 cents to $19.17.

Chart from CalculatedRisk

From NBF Financial

The U.S. jobs market surprised on the upside in October with the creation of 151,000 jobs, the first positive number in five months. (…)  Despite the improvement, it is worth keeping in mind that the employment-to-population ratio dropped to a 12-month low of 10-month low of 58.3%. Even if the current pace of hiring is still not strong enough to significantly reduce the unemployment rate, the aggregate purchasing power of the household sector continues to improve. As today’s Hot Chart shows, total payroll earnings (the product of total hours worked in the economy and hourly earnings), rose 0.6% in October and is now virtually back to its pre-recession peak level. This development, combined with the near certainty that the U.S. Congress will reconduct the tax cuts that were set to expire at the end of this year, will help support an increase in consumer spending in the months ahead.  If this is the case, the inventory drawdown that we expect in Q4 may prove to be short-lived.

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And, for the bears, from David Rosenberg:

The headline was undoubtedly strong, as were some of the details, but we want to warn readers that this was not a universally solid report. First, within the nonfarm report itself, virtually all the gains were in three sectors — health/education, retail trade and waste/administrative services. Goods-producing employment barely rose. The diffusion index for private payrolls dipped in October, to 55.0 from 55.6, which is a four-month low, and for manufacturing, the diffusion index fell to 42.1 from 54.3, which is the lowest since December 2009. So while there was depth to the report, in terms of magnitude, there was not a whole lot of breadth to it. Many sectors still reported job declines last month, including manufacturing, commercial and residential construction, transportation, information, financial and government. As I said, not a universally strong report, notwithstanding the solid headline results.

Moreover, the Household Survey showed a 330,000 decline in October, and again, full-time jobs declined, as they have for each of the past five months for a cumulative plunge of 1.1 million. The employment-to-population rate — the share of the population that is working — fell to 58.3% from 58.5%, a 10-month low. Many labour market experts actually consider this to be the most accurate barometer of the health in the labour market (though they are clearly not day traders, judging from the immediate reaction in the bond and stock pits). And many of the other measures of the unemployment rate edged up, with the broad U6 index staying stubbornly high at 17%. It will be very difficult to build any sustained wage pressure with this degree of slack overhanging the labour market. (…)

Bottom line: Nice headline on U.S. employment, and the income figure too. But the Household survey did not offer ratification and the problem of excess labour supply has clearly not gone away. We finished off October with a level of jobless claims (455k) that is consistent with stagnant job growth, so do not be surprised to see some giveback in payrolls when the November data roll around next month.

My bottom line: a job is a job, and this employment report, coupled with positive revisions in the originally pretty dismal previous 2 months, must be seen positively. As ISI says:

The question has shifted from how intense is this slowdown to is this the floor for the deceleration.  The jobs report suggests personal income likely jumped 0.6% in October and industrial production climbed 0.5%.

 

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