US: October’s NFP report should allay fears of a severe slowdown in hiring – Wells Fargo
|Data released today showed the US economy created 128K jobs in October, surpassing significantly expectations. According to analysts at Wells Fargo it was a pretty solid jobs report. They explain that stronger labor force growth boosted unemployment.
Key Quotes:
“While October’s gain is below the average of the prior three months, now reported at 176K, it comes amid two key temporary distortions to the data. First, federal government hiring fell by 17K as 20K workers doing temporary prep work for next year’s Census completed their jobs. Second, the GM strike lopped a sizeable chunk of jobs off the headline. The BLS reported 46K workers on strike during the survey week and employment at motor vehicle & parts manufacturers fell 42K. That implies there was limited impact to parts suppliers. Through the temporary factors, the pace of hiring now looks to have picked up a bit since the summer.”
“The unemployment rate rose in October but for the right reasons. Employment as measured by the more volatile household survey posted another solid gain (+241K), but that was smaller than the increase in the labor force (+325K). At 63.3%, the labor force participation rate is at a new cycle high.”
“Taking a step back, however, average hourly earnings have still slowed since the start of the year. Despite a tight jobs market, we expect strengthening in wages to be limited.”
“Today’s report illustrates that the wheels are hardly coming off the labor market, but we continue to expect a more subdued pace of hiring in the coming months relative to the past few years and even the start of the current year.”
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