| Consensus | Consensus Range | Actual | Previous | Revised | |
|---|---|---|---|---|---|
| Nonfarm Payrolls - M/M | 179,000 | 130,000 to 260,000 | 150,000 | 336,000 | 297,000 |
| Unemployment Rate | 3.8% | 3.7% to 3.9% | 3.9% | 3.8% | |
| Private Payrolls - M/M | 143,000 | 110,000 to 170,000 | 99,000 | 263,000 | 246,000 |
| Manufacturing Payrolls - M/M | -23,000 | -25,000 to -5,000 | -35,000 | 17,000 | 14,000 |
| Participation Rate | 62.8% | 62.8% to 62.8% | 62.7% | 62.8% | |
| Average Hourly Earnings - M/M | 0.3% | 0.2% to 0.3% | 0.2% | 0.2% | 0.3% |
| Average Hourly Earnings - Y/Y | 4.0% | 4.0% to 4.2% | 4.1% | 4.2% | 4.3% |
| Average Workweek | 34.4hrs | 34.4hrs to 34.4hrs | 34.3hrs | 34.4hrs |
Highlights
Nonfarm payrolls rose 150,000 in October, below Econoday's consensus for 179,000 and near the low end of the consensus range. Moreover, there is a net downward revision to 101,000 for August and September that moderates the overall pace of hiring in recent months. Some of the softer gain in October can be attributed to a decline of 33,200 in manufacturing of motor vehicles and parts while the UAW strike is active. These jobs will come back once the strike is settled.
Private payrolls are up 99,000 in October. The goods-producing sector is down 11,000 with manufacturing down 35,000 but construction up 23,000 and mining and logging up 1,000. Payrolls among service-providers rose 110,000 reflecting strong gains among education and health services of 89,000. Government payrolls are up 51,000 in large part from hiring of 38,000 at the state and local level.
October average hourly earnings are up 0.2 percent month-over-month and up 4.1 percent year-over-year. The year-over-year pace is the lowest since up 3.9 percent in June 2021, but remains favorable for real wage increases.
The unemployment rate edged up a tenth to 3.9 percent in October to its highest since 4.0 percent in November when tech sector layoffs were at their peak. Prior to that, the October rate is the highest since 4.0 percent in January 2022. The U6 unemployment rate which includes those marginally attached to the labor force and those working part-time for economic reasons is up 2 tenths to 7.2 percent, its highest since 7.2 percent in February 2022.
Slightly higher unemployment reflects a decrease in the labor force of 201,000 to 167.728 million with the number of employed down 348,000 and unemployed up 146,000. The labor force participation rate declined a tenth to 62.7 percent in October and suggests that recent improvements in the supply of labor have moderated.
Those working part-time for economic reasons are up 218,000 to 4.283 million and may include some taking on seasonal work for a little extra income. Job losers are up 201,000 to 3.059 million with layoff activity remaining modest. Job leavers are essentially the same in October as September at down 3,000 to 800,000. New entrants to the labor force rose 44,000 to 612,000, but were not enough to offset those exiting it.
Fed policymakers will see more evidence here of a cooling labor market, although they may be a bit disappointed that the imbalance in labor supply has not improved further. Nonetheless, hiring appears modest with moderate wage gains that are evidence of easing pressure on compensation costs.
Private payrolls are up 99,000 in October. The goods-producing sector is down 11,000 with manufacturing down 35,000 but construction up 23,000 and mining and logging up 1,000. Payrolls among service-providers rose 110,000 reflecting strong gains among education and health services of 89,000. Government payrolls are up 51,000 in large part from hiring of 38,000 at the state and local level.
October average hourly earnings are up 0.2 percent month-over-month and up 4.1 percent year-over-year. The year-over-year pace is the lowest since up 3.9 percent in June 2021, but remains favorable for real wage increases.
The unemployment rate edged up a tenth to 3.9 percent in October to its highest since 4.0 percent in November when tech sector layoffs were at their peak. Prior to that, the October rate is the highest since 4.0 percent in January 2022. The U6 unemployment rate which includes those marginally attached to the labor force and those working part-time for economic reasons is up 2 tenths to 7.2 percent, its highest since 7.2 percent in February 2022.
Slightly higher unemployment reflects a decrease in the labor force of 201,000 to 167.728 million with the number of employed down 348,000 and unemployed up 146,000. The labor force participation rate declined a tenth to 62.7 percent in October and suggests that recent improvements in the supply of labor have moderated.
Those working part-time for economic reasons are up 218,000 to 4.283 million and may include some taking on seasonal work for a little extra income. Job losers are up 201,000 to 3.059 million with layoff activity remaining modest. Job leavers are essentially the same in October as September at down 3,000 to 800,000. New entrants to the labor force rose 44,000 to 612,000, but were not enough to offset those exiting it.
Fed policymakers will see more evidence here of a cooling labor market, although they may be a bit disappointed that the imbalance in labor supply has not improved further. Nonetheless, hiring appears modest with moderate wage gains that are evidence of easing pressure on compensation costs.
Market Consensus Before Announcement
A 179,000 rise is the call for nonfarm payroll growth in October versus 336,000 in September which was much stronger than expected. Average hourly earnings in October are expected to rise 0.3 percent on the month for a year-over-year rate of 4.0 percent; these would compare with 0.2 and 4.2 percent in September. October's unemployment rate is expected to hold unchanged at 3.8 percent.
Definition
The most closely watched of all economic indicators, the employment situation is a set of monthly labor market indicators based on two separate reports: the establishment survey which tracks 650,000 worksites and offers the nonfarm payroll and average hourly earnings headlines and the household survey which interviews 60,000 households and generates the unemployment rate.
Nonfarm payrolls track the number of part-time and full-time employees in both business and government. Average hourly earnings track employee pay while the average workweek, also part of the establishment survey, tracks the number of hours worked. The report's private payroll measure excludes government workers.
The unemployment rate measures the number of unemployed as a percentage of the labor force. In order to be counted as unemployed, one must be actively looking for work. Other commonly known data from the household survey include the labor supply and discouraged workers.
Nonfarm payrolls track the number of part-time and full-time employees in both business and government. Average hourly earnings track employee pay while the average workweek, also part of the establishment survey, tracks the number of hours worked. The report's private payroll measure excludes government workers.
The unemployment rate measures the number of unemployed as a percentage of the labor force. In order to be counted as unemployed, one must be actively looking for work. Other commonly known data from the household survey include the labor supply and discouraged workers.
Description
If ever there was an economic report that can move the markets, this is it! The anticipation on Wall Street each month is palpable, the reactions can be dramatic, and the information for investors is invaluable. By digging just a little deeper than the headline unemployment rate, investors can take more strategic control of their portfolio and even take advantage of unique investment opportunities that often arise in the days surrounding this report.
The employment data give the most comprehensive report on how many people are looking for jobs, how many have them, what they're getting paid and how many hours they are working. These numbers are the best way to gauge the current state as well as the future direction of the economy. Nonfarm payrolls are categorized by sectors. This sector data can go a long way in helping investors determine in which economic sectors they intend to invest.
The employment statistics also provide insight on wage trends, and wage inflation is high on the list of opponents of easy monetary policy. Fed officials constantly monitor this data watching for even the smallest signs of potential inflationary pressures, even when economic conditions are soggy. If inflation is under control, it is easier for the Fed to maintain a more accommodative monetary policy. If inflation is a problem, the Fed is limited in providing economic stimulus.
By tracking the jobs data, investors can sense the degree of tightness in the job market. If wage inflation threatens, it's a good bet that interest rates will rise; bond and stock prices will fall. No doubt that the only investors in a good mood will be the ones who watched the employment report and adjusted their portfolios to anticipate these events. In contrast, when job growth is slow or negative, then interest rates are likely to decline - boosting up bond and stock prices in the process.
Importance
The employment situation is the primary monthly indicator of aggregate economic activity because it encompasses all major sectors of the economy. It is comprehensive and available early in the month. Many other economic indicators are dependent upon its information. It not only reveals information about the labor market, but about income and production as well. In short, it provides clues about other economic indicators reported for the month and plays a big role in influencing financial market psychology during the month. Additionally, the Fed has made 6.5 percent unemployment a threshold for considering changes in policy - both for quantitative easing and the fed funds rate. And the Fed has emphasized that it is overall labor market conditions that matter - not just a specific number.
Interpretation
The bond market will rally (fall) when the employment situation shows weakness (strength). The equity market often rallies with the bond market on weak data because low interest rates are good for stocks. But sometimes the two markets move in opposite directions. After all, a healthy labor market should be favorable for the stock market because it supports economic growth and corporate profits. At the same time, bond traders are more concerned about the potential for inflationary pressures.
The unemployment rate rises during cyclical downturns and falls during periods of rapid economic growth. A rising unemployment rate is associated with a weak or contracting economy and declining interest rates. Conversely, a decreasing unemployment rate is associated with an expanding economy and potentially rising interest rates. The fear is that wages will accelerate if the unemployment rate becomes too low and workers are hard to find.
Nonfarm payroll employment indicates the current level of economic activity. Increases in nonfarm payrolls translate into earnings that workers will spend on goods and services in the economy. The greater the increase in employment, the faster is the total economic growth. When the economy is in the mature phase of an expansion, rapid increases in employment cause fears of inflationary pressures if rapid demand for goods and services cannot be met by current production.
When the average workweek trends up, it supports production gains in the current period and portends additional employment increases. When the average workweek is in a declining mode, it probably is signaling a potential slowdown in employment growth-or even outright declines in employment in case of recession.
Gains in average hourly earnings represent wage pressures. It is worth noting that these figures aren't adjusted for overtime pay or shifts in the composition of the workforce, which affects wages on its own. Market participants believe that a rising trend in hourly earnings will lead to higher inflation. But if increased wages are matched by productivity gains, producers likely will not increase product prices with wages because their unit labor costs are stable.
The employment data give the most comprehensive report on how many people are looking for jobs, how many have them, what they're getting paid and how many hours they are working. These numbers are the best way to gauge the current state as well as the future direction of the economy. Nonfarm payrolls are categorized by sectors. This sector data can go a long way in helping investors determine in which economic sectors they intend to invest.
The employment statistics also provide insight on wage trends, and wage inflation is high on the list of opponents of easy monetary policy. Fed officials constantly monitor this data watching for even the smallest signs of potential inflationary pressures, even when economic conditions are soggy. If inflation is under control, it is easier for the Fed to maintain a more accommodative monetary policy. If inflation is a problem, the Fed is limited in providing economic stimulus.
By tracking the jobs data, investors can sense the degree of tightness in the job market. If wage inflation threatens, it's a good bet that interest rates will rise; bond and stock prices will fall. No doubt that the only investors in a good mood will be the ones who watched the employment report and adjusted their portfolios to anticipate these events. In contrast, when job growth is slow or negative, then interest rates are likely to decline - boosting up bond and stock prices in the process.
Importance
The employment situation is the primary monthly indicator of aggregate economic activity because it encompasses all major sectors of the economy. It is comprehensive and available early in the month. Many other economic indicators are dependent upon its information. It not only reveals information about the labor market, but about income and production as well. In short, it provides clues about other economic indicators reported for the month and plays a big role in influencing financial market psychology during the month. Additionally, the Fed has made 6.5 percent unemployment a threshold for considering changes in policy - both for quantitative easing and the fed funds rate. And the Fed has emphasized that it is overall labor market conditions that matter - not just a specific number.
Interpretation
The bond market will rally (fall) when the employment situation shows weakness (strength). The equity market often rallies with the bond market on weak data because low interest rates are good for stocks. But sometimes the two markets move in opposite directions. After all, a healthy labor market should be favorable for the stock market because it supports economic growth and corporate profits. At the same time, bond traders are more concerned about the potential for inflationary pressures.
The unemployment rate rises during cyclical downturns and falls during periods of rapid economic growth. A rising unemployment rate is associated with a weak or contracting economy and declining interest rates. Conversely, a decreasing unemployment rate is associated with an expanding economy and potentially rising interest rates. The fear is that wages will accelerate if the unemployment rate becomes too low and workers are hard to find.
Nonfarm payroll employment indicates the current level of economic activity. Increases in nonfarm payrolls translate into earnings that workers will spend on goods and services in the economy. The greater the increase in employment, the faster is the total economic growth. When the economy is in the mature phase of an expansion, rapid increases in employment cause fears of inflationary pressures if rapid demand for goods and services cannot be met by current production.
When the average workweek trends up, it supports production gains in the current period and portends additional employment increases. When the average workweek is in a declining mode, it probably is signaling a potential slowdown in employment growth-or even outright declines in employment in case of recession.
Gains in average hourly earnings represent wage pressures. It is worth noting that these figures aren't adjusted for overtime pay or shifts in the composition of the workforce, which affects wages on its own. Market participants believe that a rising trend in hourly earnings will lead to higher inflation. But if increased wages are matched by productivity gains, producers likely will not increase product prices with wages because their unit labor costs are stable.
