The MSM will report this as "we're in terrible, terrible trouble!
Economists React: 'October Surprise' in Jobs
WSJ.COM ECONOMICS BLOG
Economists and others weigh in on the the larger-than-unexpected 166,000 increase in nonfarm payrolls for October.
#
October was the strongest non-farm employment gain in 5 months. It follows news of the strongest GDP gain in six quarters from earlier this week. The economy may be slowing into the fourth quarter, but from what base? ? The Fed is concerned about the economy's ability to absorb the financial shocks that turned severe over the summer. Hard evidence on the economy meanwhile, continues to show amazing resiliency. Growth in the fourth quarter is likely to slow from the fast pace, but we do not see the slowdown as a crisis. Employment gains will be supportive of consumption activity. –Societe Generale
#
The only area of unexpected weakness is the 22,000 decline in retail employment (although some of that may be recaptured in the growth in temporary help). This decline, in combination with the weak average hourly earnings growth, suggests some possible weakness in the holiday shopping season and is compelling evidence that there is a real risk of a sharp consumption slowdown. –Drew Matus, Lehman Brothers
#
Some of the softness in average hourly earnings appeared to reflect the fact that much of the October job growth was concentrated in relatively low wage occupations — such as restaurant employment (+37,000) and temp workers (+20,000)? The recent trend in initial and continuing jobless claims point to some possible softening in labor market conditions toward the end of October. If sustained, this could imply a deceleration in job growth in next month?s report. –Morgan Stanley Research
#
This is a strong report but the labor market is not exactly firing on all cylinders. Instead, a more accurate description would be that the moderation has been much more limited both in magnitude and scope than most economists expected a few months ago? Today's number is thus a big relief for those worried about a recession, but it does not entirely change the fact that net hiring has cooled. It has just slowed down by a lot less than many economists expected, but it has without a doubt cooled and the pace of payroll gains is definitely consistent with a gradually rising unemployment rate. –Stephen Stanley, RBS Greenwich Capital
#
The primary catalyst behind the October surprise was the increase in the service sector… Before we all declare victory and head to tavern to end a rollercoaster week in the markets, it might be useful to take a step back and look at the business services data. We are quite skeptical that in the current market environment that the economy actually added 65,000 in business services for the month and expect to see a revised number when the November report is released? However, even with an expected revision this data does support our core scenario for the economy going forward. We anticipate that the payrolls market will move sideways for the next several months in the context of an underperforming economy over the next two quarters. –Joseph Brusuelas, IDEAglobal Economics
#
Sustained payroll growth at this pace would keep the Fed on hold indefinitely, but that's an unlikely prospect. This report reflects the relative strength of third-quarter GDP and the rise in jobless claims is already signaling softer numbers ahead. Almost all the acceleration was in services, primarily business admin support, which rose 35,000 after a 25,000 September drop. Seasonal problems? Elsewhere, retail and manufacturing were both worse than September, finance was a bit better, and construction down only 5,000; unbelievable, literally? Better than recent months but less impressive than the headline. –Ian Shepherdson, High Frequency Economics
#
Job creation accelerated in October but has averaged only 103,000 per month over the past five months. This is slightly more than half of its 2006's pace as job creation has been on a slowing trend for the past 18 months. Some, but not all, of this softness is due to the decline in housing and the turmoil in the financial markets. And the pace of job creation over the past year will be revised down when benchmark revisions are made in February. –Steven Wood, Insight Economics |
