 | Nonfarm Payrolls Increased 214,000 in October |
|
| Posted Under: Data Watch • Employment |
Implications: Month after month, the job market continues to make solid progress. Although nonfarm payrolls grew a little less than the consensus expected in October, they still grew a respectable 214,000 and were up 245,000 including revisions for prior months, with all of the upward revisions coming from the private sector. Even at 214,000, that's the ninth month in a row above 200,000. Meanwhile, civilian employment, an alternative measure of jobs that includes small-business start-ups, exploded to the upside, rising 683,000 in October. As a result, the job market was able to absorb a 416,000 increase in the labor force (people working or looking for work) and still push the unemployment rate down to a new low of 5.8% for the recovery. Although the headline jobless rate only ticked down one-tenth of a percent, unrounded numbers show the decline was very close to two-tenths, to 5.756% from 5.942%. More important, the jobless rate is now where the Federal Reserve, as recently as September, thought it would be in mid-2015. In other words, we think today's data support our forecast that the Fed will start raising short-term rates in the first half of next year. Also, look for the Fed to remove the "considerable time" language in its statement (regarding how long it will keep short-term rates near zero) at the next meeting in mid-December. Another sign of improvement that will get the Fed's notice is that the participation rate finally appears to be leveling off after many years of decline. The participation rate ticked up to 62.8% in October, which is the same as where it was a year ago. That may not sound like much, but it's the first time in this recovery the participation rate has not been down from where it was the prior year. It'll be interesting to see whether a mild acceleration in economic growth over the next couple of years can offset the continued aging of baby Boomers to keep participation roughly unchanged. Perhaps the best news in today's report was that the total number of hours worked increased 0.5% and are up 2.8% in the past year. This helps offset slow growth in average hourly earnings, up only 0.1% in October and 2% versus a year ago. Looking at wages and hours combined, total cash earnings are up 4.9% in the past year, which will translate into growing consumer spending in the months ahead. If you are pre-disposed to gripe about the labor market, there are still things to complain about; the labor market is far from fully healed. Better policies would certainly have resulted in faster job growth the past several years. But nonfarm payrolls are up 220,000 per month in the past year and we expect more job growth, less unemployment, and faster wage growth in the year ahead.
Click here for PDF version
|
|