The U.S. non-farm payroll report showed a much higher than anticipated gain in jobs with 271K jobs added in October. The ADP report estimated an increase of 182K jobs and the market expectations were at 179K for October. The growth in wages also climbed to 2.5% — its highest y/y growth since mid-2009. There were also modest upward revisions for previous months. The main sectors that expanded were in professional and business services, health care, retail trade, food services and drinking places, and construction. The rate of unemployment inched down to 5%. The U.S. dollar rallied against the Euro and yen while gold and silver plummeted.
In terms of revisions, there were little of them for for the previous months’ figures — with a total upward revision of only 12K for September and August combined.
In October, the rate of U.S. unemployment was 0.8 percent points below the rate recorded in October 2014.
The number of unemployed persons also (7.908 million) slightly declined by 7K in October compared to the previous month. But the civilian labor force grew by 313K. So there was a gain in number of people participating in the labor force and little change in the number of unemployed. Nevertheless, the participation rate remained flat at 62.4%.
Finally, wages were the other good news as they grow in October compared to September – the hourly earnings reached $25.20 per hour; wages rose by an annual gain of 2.5%, year on year. The last time we saw such a growth rate was back in 2009.
The previous two NFP reports weren’t impressive, but this one makes the Fed’s job a bit simpler coming December – the rate hike has more merit considering the latest report. Keep in mind, however, this is only a single report and should be treated as such. The next report is just as important and if it comes short, this could reshuffle the cards again on a rate hike. But this report still shows the U.S. labor market shows some promise especially if this is a start of an upward trend for jobs gain and wage growth.
For further reading: