Non-farm Payrolls Up 250K, Unemployment Rate At 3.7%

In a very strong showing in which wage pressures may be less severe than they look, October's nonfarm payroll growth easily surpassed expectations, rising 250,000 in the month and with strength centered in two sensitive components to economic pivots: manufacturing with a much higher-than-expected 32,000 gain and professional & business services where payrolls rose 35,000. And available labor in construction is now more scarce with payrolls here up a very sharp 30,000.

Average hourly earnings posted an expansion high year-on-year rate, up 3 tenths to 3.1 percent. But, importantly, this reflects an easy comparison with October last year. The month-to-month pace actually eased, rising at 0.2 percent vs two 0.3 percent gains and one 0.4 percent gain in the three prior reports.

The unemployment rate held at a low and favorable 3.7 percent with the labor participation rate improving 2 tenths to 62.9 percent.

The monthly slowing in wages removes at least some of the urgency felt by the hawks at the Federal Reserve who were voicing their views at the September FOMC that policy may, in a need to cool the economy and the labor market, have to rise beyond neutral and into the restrictive zone. The Fed may not raise rates at their meeting later this month, but today's report does confirm, and strongly so, expectations for a rate hike at the December FOMC.