Fri, NOV 2nd, 2012
The October NFP was pretty good across the board. It showed solid gains with +171K jobs added [vs. 125K consensus, range of +30-145K]. The BLS revised up September to +148K from +114K [plus another +50K for revisions to prior months]. The October unemployment rate ticked up to 7.9% [from 7.8%]. This was in-line with the consensus expectation. But, it’s important to recognize that this +0.1% tick-up was for “the right reasons” as more folks entered the labor force looking for work. Labor force participation rose to 63.8%. This statistic has been in the basement since the recession for cyclical, structural and demographic reasons. The latter will keep it below the long-run trend for some time. However, it is encouraging to see some of those in the first two categories feel optimistic enough to re-engage.
Private payrolls = +184K [service providing jobs were +163K of this total] Gov’t = -13K [down M/M] Manufacturing = +13K [up M/M] Retail = +36K [up M/M] Construction = +17K [up M/M] Goods-Producing = +21K [up M/M] Education/Health = +25K [down M/M] Hospitality = +28K [down M/M]
Of all the various private industries, ~61% of them posted positive jobs growth in October.
Avg. workweek = 34.4 hours [flat M/M] Factory overtime was flat M/M Avg. hourly earnings were flat [but +1.6% on a Y/Y basis] Aggregate wages increased +0.1% M/M
According to the household survey, the labor force increased +578K, while +410K people found work [thus the +0.1% up-tick in the unemployment rate]. Importantly, the increase in employment was due to people finding full-time jobs. Part-time employment levels dropped by -269,000. The underemployment rate fell to 14.6%. The long-term unemployed rate, which measures people who have been out of work for over a year, didn’t budge from September.
All told, the underlying metrics of this report show continued improvement in the labor market. And under the current trend, it will take another 22 months, give or take, to see the jobless rate dip below 7%. We believe this is a watermark the FOMC is carefully watching.
Jason L. Ware, MBA
Market Strategist, Chief Analyst
Albion Financial Group
(801) 487-3700; (877) 487-6200