U.S. October Employment - Unambiguously strong
October’s non-farm payroll at 165k overall, 159k private, with unemployment down to 4.1% from 4.2%, and even average hourly earnings on the strong side with a 0.4% increase, is strong across the board and makes a December Fed tightening highly likely, though we will also receive November’s non-farm payroll before the Fed next meets.
The main surprise in the payroll breakdown is a 70k increase in professional and business, a sector that before this data was trending barely above neutral. October’s gain was broad based among its subcomponents. A 24.8k rise in transport and warehousing was led by 17.4k from couriers and messengers. Health care and social assistance rose by 55.1k, correcting recent signs of slowing.
Manufacturing saw a strong month at 19k but construction slipped by 3k, perhaps a sign of housing sector weakness. Leisure and hospitality, a volatile sector recently, saw a weak month at -13k. Adding to the positive message are upward back month revisions for August and September, totaling 84k overall and 85k in the private sector.
The details of the household survey, which calculates the unemployment rate, are positive, with employment surging by 463k, exceeding a 421k rise in the labor force. The rate is back to 4.1% after edging up to 4.2% in September.
Average hourly earnings rose by 0.37% before rousing with September revised up significantly to 0.27% from 0.13%. Yr/yr growth is still trending lower, falling to 3.1% from 3.2%, but September was revised up from 3.0%.
The workweek was unchanged, but has now seen three straight months at 34.4 hours. Before August we had not seen such a strong workweek since March 2024. The report is unambiguously strong.
