By Peter Rupert
The BLS announced that employment in October gained 531,000 jobs with the private sector increasing 604,000 and the government sector shedding 73,000. Moreover, September’s employment was revised up 118,000 and August up 117,000. Recall there was much disappointment when the September increase was “only” 194,000 and did not live up to expectations. The first chart below shows what the data looked like for the September report and the second chart is the October data. This gives a much stronger labor market rebound in just one month.
The bulk of the increase came from a 496,000 increase in the service sector, led by leisure and hospitality, up 164,000.
Hours of worked declined from 34.8 to 34.7 taking some of the impact off the employment gains. Hourly earnings rose from $30.85 to $30.96 and are up 4.9% year over year.
The labor force increased 104,000 with no change in the labor force participation rate of 61.6. The employment to population rate rose slightly from 58.7 to 58.8. The number of unemployed persons fell by 255,000. The unemployment rate fell from 4.8% to 4.6%. Long term unemployment has also been falling. The composition of the unemployed is also starting to look more familiar.
At the last FOMC meeting the paring of QE along with the notion that inflation was more of a concern were of note. The increase in average hourly earnings is far above its average over the past decade or so, as is inflation. If average hourly earnings falls back to its longer run average while inflation remains elevated, real earnings will begin to fall…that is something not seen since in the last 8 years, when real earnings were rising.
