Labor market in October 2016

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2015 Economic Calendar

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Employment Situation  Released On 11/6/2015 8:30:00 AM For Oct, 2015 Prior Prior Revised Consensus Consensus Range Actual Nonfarm Payrolls - M/M change 142,000  137,000  190,000  150,000  to 240,000  271,000  Unemployment Rate - Level 5.1 % 5.0 % 4.9 % to 5.1 % 5.0 % Private Payrolls - M/M change 118,000  149,000  174,000  140,000  to 230,000  268,000  Participation Rate - level 62.4 % 62.4 % Average Hourly Earnings - M/M change 0.0 % 0.2 % 0.1 % to 0.4 % 0.4 % Av Workweek - All Employees 34.5 hrs 34.5 hrs 34.5 hrs to 34.6 hrs 34.5 hrs Highlights Bring on that rate hike! Nonfarm payrolls surged 271,000 in October vs expectations for 190,000 and against Econoday's top-end forecast for 240,000. Revisions in prior months are not a factor. The unemployment rate is down 1 tenth at 5.0 percent with average hourly, to underscore all the strength and in a hint of wage inflation, jumping 0.4 percent. Government payrolls, up only 3,000, did not inflate the headline payroll gain as private payrolls rose 268,000. Among the superlatives, the 271,000 rise for nonfarm payrolls is the strongest since December last year. The 5.0 percent unemployment rate is the lowest since April 2008. The broadly defined U-6 unemployment rate, a favorite of Janet Yellen's, is down 2 tenths to 9.8 percent for the lowest reading since May 2008. The year-on-year rate for average hourly earnings, at plus 2.5 percent, is the strongest since July 2009. Payrolls in professional & business services surged 78,000 in the month with the subcomponent of temporary help services - considered a leading indicator for future hiring - up a very strong 25,000. Trade & transportation rose 51,000 while retail trade, which is gearing up for the holidays, rose 44,000. Construction spending is strong and payrolls show it, up 31,000 in the month. But the tide failed to lift the export-hit manufacturing sector where payrolls were unable to rise, unchanged in the month following two prior declines. But there is favorable news on manufacturing as weekly hours in the sector edged higher to 40.7 with overtime also edging up, to 3.3 hours. These point to badly needed strength for industrial production. Other readings include no change for average weekly hours at 34.5, no change in the labor force participation rate at 62.4 percent, but a 1 tenth rise in the employment-to-population ratio to 59.3 percent. Turning back to payroll revisions, September is revised 5,000 lower to 137,000 with August revised 17,000 higher to 153,000 for a net 12,000 gain. There's still one more employment report to go before the December FOMC - and anything of course can happen - but it seems academic following today's report which points to a pivot higher for an economy where domestic strength is offsetting foreign weakness. Recent History Of This Indicator Nonfarm payrolls are expected to rise 190,000 in October which would be a nearly 50,000 increase from September and strong enough to keep expectations alive for a December rate hike. The unemployment rate is expected to slip 1 tenth to 5.0 percent, in what would be another positive for a rate hike. And average hourly earnings are expected to show some pressure, up 0.2 percent vs no change in September. Definition The employment situation is a set of labor market indicators based on two separate surveys in this one report. The unemployment rate equals the number of unemployed persons divided by the total number of persons in the labor force, which comes from a survey of 60,000 households (this is called the household survey). Workers are only counted once, no matter how many jobs they have, or whether they are only working part-time. In order to be counted as unemployed, one must be actively looking for work. Other commonly known figures from the Household Survey include the labor supply and discouraged workers.  Why Investors Care   During the mature phase of an economic expansion, monthly payrolls gains of 150,000 or so are considered relatively healthy. In the early stages of recovery though, gains are expected to surpass 250,000 per month. Data Source: Haver Analytics   The civilian unemployment rate is a lagging indicator of economic activity. During a recession, many people leave the labor force entirely, so the jobless rate may not increase as much as expected. This means that the jobless rate may continue to increase in the early stages of recovery because more people are returning to the labor force as they believe they will be able to find work. The civilian unemployment rate tends towards greater stability than payroll employment on a monthly basis. It reveals the degree to which labor resources are utilized in the economy. Data Source: Haver Analytics