U.S. nonfarm payrolls rose for the first time in five months in October, by a much better-thanexpected 151,000, with a solid contribution from the private sector (159,000, the biggest gain in six months) and less drag at the state & local levels. Importantly, upward revisions showed private sector jobs averaging a decent 132,000 in the past four months, which, if sustained, should reduce the unemployment rate over the long term. The job gains were fairly widespread, led by business/professional services and education/health. Temporary help remained strong, hinting at
further job gains to come. Retailers added 28,000 positions, the most since January, suggesting they are gearing up for a somewhat better holiday season than last year. Surprisingly, however, manufacturing lost a few workers for the third straight month. Average weekly hours were extended, which, combined with the jump in employment, lifted aggregate weekly hours worked by 0.4% in the month and 1.7% annualized from Q3. Assuming some increase in productivity, the bounce in work hours
supports our estimate of 2.0% GDP growth in Q4.
The report wasn’t without a few blemishes, however. The household survey showed a 330,000
decline in jobs, holding the unemployment rate aloft at 9.6%. The ''underemployment'' rate eased only
slightly to 17.0%, and the number of long-term unemployed turned back up.
Adding to the sense of strength in the report, the government said that job losses in August and September were not nearly as bad as previously reported. The total upward revisions added 110,000 jobs in the two months.
Job losses in August were almost completely revised away and now show only a 1,000 loss compared with prior estimate of 57,000 job losses. In September, 41,000 jobs were lost, up from the prior estimate of 66,000.
Excluding government workers, the economy added 159,000 jobs in October, the highest since April.
Despite the improvement, job growth is still not at strong enough to bring down the unemployment rate, which is above 9.5% for the fifteenth straight month.
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