“She’ll do”. Or maybe “good enough” is the better description.
The US economy added 161K jobs in October, missing consensus of 173k (forecast range +105k to +208k). September’s print was revised up to 191K from an initial reading of 156K. Here are the highlights via Bloomberg:
- Nonfarm payrolls, net revisions, added 44k from prior two months
- Participation rate 62.8% vs prior 62.9%
- Avg. hourly earnings m/m 0.4%, est. 0.3%, prior 0.3%
- Y/y 2.8%, prior 2.7% est. 2.6%
- Nonfarm private payrolls rose 142k vs prior 188k; est. 170k, range 130k-200k from 39 economists surveyed
- Manufacturing payrolls fell 9k after falling 8k in the prior month; economists estimated -4k, range -8k to 5k from 19 economists surveyed
- Unemployment rate 4.9% vs prior 5.0%; est. 4.9%, range 4.8%-5% from 82 economists surveyed
- Underemployment rate 9.5% vs prior 9.7%
- Change in household employment fell 43k vs prior 354k
The better than expected wage growth is the focal point and would seem to all but cement a December hike. The following is from BNY Mellon:
“The report does not contain anything to deter the Fed from raising rates in December. Market reacted ‘marginally’ and as expected to increasing rate hike expectations, with yields slightly higher in the short end and curve a bit flatter. While data points to a hike, political environment remains ‘far from predictable’ and is still the ‘largest influence on risk taking.’”
Yes, “the political environment remains far from predictable,” as evidenced by Donald Trump’s reaction to the report:
Here’s some color from various analysts via Dow Jones:
Steady gains in hiring and a small decline in the jobless rate last month keep the Federal Reserve on track to raise short-term interest rates at its December policy meeting.
Employment gains were in line with the pace of recent months—161,000 more jobs in October, compared with an average of 181,000 a month for the year as a whole. That should fit the Fed’s view that the labor market has “continued to strengthen,” as officials said in a statement released Wednesday after their two-day policy meeting.
In the same statement, they held rates steady but said job numbers in this ballpark had strengthened the case for lifting them.
Meantime, wages are showing surer signs of rising, meaning slack in the labor market and the broader economy is gradually diminishing. Americans in private-sector nonfarm jobs earned an average $25.92 an hour in October, up 10 cents from the prior month. That put wages up 2.8% over the past year, the strongest 12-month gain since mid-2009.
The jobless rate, at 4.9% in October, was a notch above the 4.8% average that officials expect for the fourth quarter as a whole. Meantime, the broader “U6” measure of unemployment, which includes discouraged and involuntary part-time workers, dropped to 9.5%—its lowest point since April 2008, further contributing to the diminished slack narrative.
Fed officials will have one more jobs report to peruse before their next policy meeting Dec. 13-14, in addition to new data on consumer spending, inflation, output and other economic trends. Expect them to stick to the message in the weeks ahead that a December rate rise is coming, with a gradual pace of increases to follow.