Payrolls Add 128K Jobs, Unemployment Rate Ticks Up To 3.6%

GM strike or not, October's employment report came in solid and steady and in line with the Federal Reserve's outlook for respectable overall economic growth. Nonfarm payrolls rose 128,000 which is on the high side of expectations with underlying strength firmly underscored by large upward revisions to the two prior months totaling a net 95,000.

Manufacturing, reflecting the effects of the now settled GM strike, fell 36,000 in a very steep decline that looks, however, to reverse in the November employment report. Other indications of just how strong the labor market is come from the unemployment rate, up 1 tenth but at a very low 3.6 percent which is just off September's 50-year low, and the participation rate which keeps climbing, up another tenth to 63.3 percent.

Yet is there available capacity in the labor market to extend job growth in the coming months? The answer, judging by wage pressures, would appear to be yes as average hourly earnings managed only a 0.2 percent rise following the prior month's unexpectedly low and unrevised no change. Year-on-year, earnings are at 3.0 percent which, along with September's revised 3.0 percent, are the lowest readings since September last year.

The Federal Reserve cut rates on Wednesday but stepped back from committing themselves to any further rate cuts unless, of course, the economy begins to weaken. But there's no indications of weakening in October's employment report which instead points to building momentum for the consumer going into the holiday shopping season.

Among special details, the 36,000 decline in manufacturing payrolls reflects a strike-related 42,000 payroll decline in motor vehicles. And payrolls in October include a 17,000 decline in Federal government workers as 20,000 temporary workers completed their 2020 Census work. In another detail, manufacturing hours fell which may hold down October's industrial production report in an effect, again, that would look to unwind with November's report.