The October non-farm payrolls report was released Friday morning, with the headline number showing the addition of 261,000 jobs last month. The September number was also revised up to an addition of 319,000 jobs from 263,000.
So what do we make of all of this, especially in light of the Fed's decision on Wednesday?
Since it is difficult to describe things as good or bad in this topsy-turvy world, let's look at Friday's jobs report from the following four perspectives:
Makes the Fed more likely to hike:
- Total Establishment Jobs and Revisions were very strong.
Makes Fed less likely to hike:
- Nothing obvious.
Should be baked in:
- Average hourly earnings (monthly 0.4% a tad higher, but annual 4.7% down from 5%).
- Average work week remaining same at 34.5.
Confusing as heck:
- Unemployment rate. The unemployment rate ticked up to 3.7% from 3.5% -- a step in the right direction, in theory. But that came with the labor force participation rate dropping to 62.2% from 62.3% (one thing almost everyone can agree on is that we'd like to see this tick higher, not lower). So the increase was due to the Household survey saying we LOST 328,000 jobs. Even for "government work" almost 600k in two things that in theory roughly measure the same things, seems like a lot, but that has been the case for months now.
Jobs continue to be the highlight of all economic and corporate data we receive (unless you look at the Household data).
That is not surprising given the difficulty companies had filling jobs. Indeed, jobs, in all likelihood, given the experiences of the past two years, will be the LAST shoe to drop in any economic weakness.
Bottom Line
This report will provide probably a touch more impetus to see a more hawkish Fed than not, but with so much changing between 2:30 p.m. on Wednesday and now, it probably isn't enough to move the needle significantly.
I've given up trying to understand why the Household data continues to be so different than the Establishment data (2.5 million jobs since March 31, versus 0.5 million) as it doesn't seem to register with anyone (other than it is what is used to calculate the unemployment rate).
