The October nonfarm payroll report was mixed in that the headline figure for October showed an 80K increase compared to the consensus forecast all around 100K gain. however at the same time we saw upward revisions to August and Septembers data that added a full 100 K jobs to those previous months readings.
September was revised up to show a 150 8K increase compared to the originally reported 103K. Also on the plus side the unemployment rate fell to 9.0% from 9.1%.
Here's a breakdown of the Establishment Survey:
- Manufacturing saw a slight 5K increase.
- Services rose 114K, with biggest gains in professional and business services (32K), education and health care (28K), and leisure (22K)
- Government work fell by 24K, as private payrolls rose 104K.
The results were broadly in line with expectations in which job growth is positive but is too slow to significantly reduce the unemployment rate. It does however show that they economy has picked up a little bit of speed in recent months compared to the first half of the year. gains were seen primarily and services as we list above and it's disappointing to see the manufacturing sector continuing to struggle.
What Does This Jobs Report Mean for US Economy, FOMC, and Sentiment:
Is this job growth enough for the FOMC to believe that it is meeting its employment mandate? I would think it doesn't change the mind of dovish members, and therefore in their view that Fed may still need to support the economy with further stimulus.
While we saw some volatility increase, the initial range following the non-farm payroll report has been pretty subdued which may imply that the markets focus - usually laser guided on this report - may be elsewhere - mainly the developments in Europe and Greece.
US equities responded to the news in free cash open trading with S&P futures falling back from the 1257 area. treasury prices fell after the release but the drop was well contained. the relatively upbeat report considering we had a drop in unemployment rate and a upward revisions to previous months could mean that the USC's higher yields this see month.
In the grand scheme of things it also should help bolster general risk sentiment as it shows that while the US economic activity isn't necessarily picking up the pace, it certainly isn't heading back down. That should help support commodities and expectations for global growth. A much weaker than expected readings could have had the opposite impact in which concerns about the pace of global economy came back to the forefront.
Now we watch the G 20, euro zone developments and look forward to incorporating this new important fundamental piece of data into are trading in the next week.
For examples on how the non-farm payroll report struck a tone for the months of September and October to check out our NFP preview.