Jobs report drill-down: Is dire data a blip or trend?
Main U.S. indexes sharply higher; Nasdaq 0.9%
Cons Disc leads S&P sector gainers; Utilities sole loser
Euro STOXX 600 index up 1.1%
Dollar rises; gold ~flat; crude, bitcoin up >1%
U.S. 10-Year Treasury yield edges up to ~4.33%
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JOBS REPORT DRILL-DOWN: IS DIRE DATA A BLIP OR TREND?
The Labor Department's much-anticipated October jobs report landed on Friday with a resounding thud.
The U.S. economy added a scant 12,000 jobs last month USNFAR=ECI, the most dismal number in 4-1/2 years, falling a mile short of the 113,000 consensus.
And that pitiful gain was attributable to government hiring; private sector payrolls fell by 28,000.
Digging deeper, services and construction jobs mitigated the damage a bit, gaining 9,000 and 8,000 jobs, respectively. But that was more than offset by 46,000 jobs lost by the manufacturing sector.
To add insult to injury, the Labor Department downwardly revised its previously stated August and September job adds, by 50.9% and 12.2%, respectively.
"Today’s weaker-than-expected jobs report not only reflected the effects of storms and strikes, but also of the continued labor market cooldown which has taken place since the Fed began raising interest rates more than two years ago," writes Julia Pollak, chief economist at ZipRecruiter.
At any rate, it was the biggest miss since April:
Elsewhere in the report, wage growth accelerated.
Average hourly earnings unexpectedly increased by 0.4% last month, hotter than September's growth and analyst expectations, which were both 0.3%.
Year-on-year, hourly wages nailed consensus by growing 4.0%, an acceleration from the prior month's 3.9% reading.
"What is worrying, is hourly wages rose again by 0.4% and the participation rate is dropping," Peter Cardillo, chief market economist at Spartan Capital Securities tells Reuters. "This is likely to rekindle the possibility that the Fed will cut rates twice before the end of the year ... I think we can count on a 25 bp cut in November and another in December."
It's the first glimpse October's inflationary landscape. And, while faster wage growth puts more money into consumer piggy banks, the metric is moving in the wrong direction as far as Powell & Co is concerned:
The jobless rate USUNR=ECI held firm at 4.1% as economists predicted. But economists didn't predict the labor market participation rate to edge lower, to 62.6% from 62.7%.
When workers leave the jobs market, and are no longer looking for work, they are not counted as unemployed. As such, a reduction in the participation rate often coincides with a drop in the unemployment rate.
That didn't happen.
The average length of time jobless workers stay jobless increased to 23.7 weeks, the highest reading since April 2022.
This trend is echoed in the Labor Department's JOLTS data, which shows hiring has been on a downtrend for more than 2-1/2 years.
Breaking unemployed workers down by race/ethnicity, Black and Hispanic jobless rates held firm at 5.7% and 5.1%, respectively.
Unemployment among Asian Americans dropped to 3.9% from 4.1%, while White joblessness increased, rising to 3.8% from 3.6%.
As a result, the White/Black jobless gap narrowed to 1.9 percentage points, its lowest level since January.
(Stephen Culp)
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FOR FRIDAY'S EARLIER LIVE MARKETS POSTS:
U.S. STOCKS RISE AFTER PAYROLLS AS AMAZON LEADS - CLICK HERE
U.S. STOCK FUTURES ADD SLIGHTLY TO GAINS, YIELDS FALL, AFTER JOBS DISAPPOINT - CLICK HERE
COULD OCTOBER PAYROLLS BE NEGATIVE? - CLICK HERE
EUROPEAN EARNINGS: BETTER BUT STILL MIXED - MORGAN STANLEY - CLICK HERE
UK GILTS: TRUSSED UP? - CLICK HERE
EUROPEAN SHARES BOUNCE, STILL SET FOR WEEKLY FALL - CLICK HERE
EUROPE BEFORE THE BELL: FUTURES STEADY BEFORE JOBS DATA - CLICK HERE
A NOVEMBER TO REMEMBER... -CLICK HERE
Early trade Nov 1 https://tmsnrt.rs/4f6WHRV
Nonfarm payrolls https://reut.rs/3AaNOYA
Inflation gauges https://reut.rs/40sVSP5
Labor market participation https://reut.rs/4easqAj
Unemployment by duration https://reut.rs/3YKrmPl
Unemployment by race and ethnicity https://reut.rs/48u6jDK
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