–Payrolls +128K; Unemp Rate 3.6%; Wages +3.0% Annual; 2-Mos Revisions +95K
–Labor Participation Rate Highest Since August 2013
By Denny Gulino
WASHINGTON (MaceNews) – The October jobs report Friday surprised by challenging the scenario of a deepening slowdown with an above-expectations payrolls total of 128,000 despite GM strike effects, a 93,000 positive contribution from two months of revisions and an unemployment rate that was hardly changed at 3.6%.
Manufacturing might have stayed level or better without the strike losses which became irrelevant to the jobs picture with the settlement. Census temp layoffs were also easily absorbed.
Among the biggest unexpected factors was the very strong upward revisions to September and August, a net gain of 95,000.
The monthly average for three months climbed to 176,000, still well below last year’s 223,000, but much better than anticipated. The most recent layoff numbers, Thursday’s initial benefit claims, were 214,750 for the four-week moving average, maintaining this year’s historically low performance.
In retrospect, Federal Reserve Chairman Jerome Powell’s “solid” characterization of the economy Wednesday was vindicated as, if anything, understated. His line in the sand, that another rate cut would need a “material reassessment,” was reinforced in cement by the jobs report and the probability of a December meeting cut was only a low 15.5% on the CME FedWatch tool based on fed fund futures.
Underlining his dissent in favor of standing still on rates, Boston Fed President Eric Rosengren Friday morning issued a statement saying, “I believe further accommodation is not needed.”
“Notable job gains occurred in food services and drinking places, social assistance, and financial activities,” the report said. “The number of unemployed persons, at 5.9 million, changed little in October.”
The broadest unemployment rate, which captures those available for work but who haven’t looked for one recently, was 7.0% in October, up a tenth from September, but back down to its rate in July.
President Donald Trump, who had repeated his criticism of the Fed Wednesday, saying it doesn’t have a clue, hailed the jobs report in a tweet, saying, “Wow, a blowout JOBS number just out … USA ROCKS!”
Fed Vice Chair Richard Clarida, interviewed on Bloomberg TV, said it was “certainly a very solid labor market report.” Growth, he said, is “moderate” right now “and these were good numbers,” along with the third quarter GDP’s +1.9% growth rate reported Wednesday.
The October labor force expanded by 325,000. “The number of unemployed persons, at 5.9 million, changed little in October,” the report said.
Food service and drinking place payroll slots increased by 48,000. “Job growth in the industry has averaged 38,000 over the past 3 months, compared with an average monthly gain of 16,000 in the first seven months of 2019,” the report said.
Social assistance hiring was up 20,000 and health care rose 15,000, part of the 402,000 added jobs over 12 months.
Employment in financial activities rose by 16,000 in the month “with gains in real estate and rental and leasing (+10,000) and in credit intermediation and related activities (+6,000),” the report said. Financial activities has added 108,000 jobs over the last 12 months.
Employment in professional and business services “continued to trend up in October (+22,000). The industry has added an average of 33,000 jobs per month thus far in 2019, compared with an average gain of 47,000 jobs per month in 2018,” the Bureau of Labor Statistics said.
Manufacturing employment decreased by 36,000 in October, less than the 42,000 subtraction attributed to the now-ended GM strike and so effectively a positive. Yet the manufacturing sector remains in contraction, according to the morning’s Institute for Supply Management report on momentum in the space, at 48.3.
The White House coordinator of economy policy, Larry Kudlow, gave a glowing account of what he said is continuing progress in negotiations over a “Phase 1” trade agreement, a key factor in gauging the future of the manufacturing sector.
He said Trump’s switch to a “phase” approach to the trade dispute was on the recommendation of the administration’s trade working group, of which he is a member. In an interview on Bloomberg TV, Kudlow said the indicator he considers most important, comments by China officials, have been “optimistic.”
On the jobs report, he said aggregating the revisions and other factors, like the strike adjustment, he thinks the payrolls gain was more than 300,000.
Federal government employment was down by 17,000 over the month, as 20,000 temporary workers who had been preparing for the 2020 Census completed their work, the BLS report said.
“Employment in other major industries–including mining, construction, wholesale trade, retail trade, transportation and warehousing, and information—showed little change over the month,” it said.
Although the rate of improvement of average hourly earnings was back to 3.0%, that was still part of an anemic pattern that fell far short to the pre-financial crisis pace of earnings gains of 4% and more.
The one tenth improvement in the month’s labor participation rate, to 63.3, brought it to the highest since August 2013.