October NFP: The Good and The Bad

Surprise, surprise! The October non-farm payrolls release caught several traders off guard, as the headline figure was much stronger than expected. Were there really notable improvements in the U.S. labor market? Let’s take a look at what’s hot and what’s not with the latest jobs figures.

The Good

Perhaps the biggest shocker for last Friday’s NFP release was that net hiring was up by 204,000 in October while the previous month’s figure was revised higher to 163,000. Economists were expecting to see a lower figure of 120,000 because of the recent U.S. government shutdown, which resulted to a considerable number of furloughed federal employees.

It appears that the jump in employment among retailers was more than enough to make up for the dip in public payrolls. Apparently, retailers like Amazon.com ramped up hiring ahead of the holiday season, contributing to the 212,000 increase in private payrolls. Meanwhile, stronger hiring in the automobile industry helped boost factory hiring to 19,000.

The Bad

The downside to the latest jobs report was that the jobless rate ticked higher from 7.2% to 7.3%. It doesn’t help that the participation rate also declined in October, which means that more people have dropped out of the labor force and have given up looking for full-time work.

Looking at quarterly trends in hiring also reveals that Q3 employment was still below average. Aside from that, the U.S. is still far behind from recovering the 8.7 million jobs lost since the 2008 recession, as the working population is just around 7 million as of October.

Now that you have an idea of how the U.S. labor market fared in October, do you think the Fed will be ready to taper in December? Let us know by voting through the poll below!