It's hard to deny that this week brought some decent numbers in an area of our economy that's still struggling, but it's important to remain vigilant as the unemployment rate actually rose slightly despite the positive data.
After the better-than-expected ADP and unemployment claims reports, the Bureau of Labor Statistics (BLS) delivered a better-than-expected gain of 171,000 jobs in October versus expectations of roughly 123,000.
August and September jobs were both revised higher adding roughly 84,000 between the two.
Even with this seemingly positive data, the unemployment rate actually rose to 7.9%. This is due to the civilian labor force rising by 578,000 to 155.6 million in October, and the labor force participation rate moving slightly higher to 63.8% (which is still relatively low).
Total employment rose by 410,000 over the month.
Average hourly wages edged lower one cent to $23.58 and hours worked remained flat at 34.4 hours.
Here are some highlights from the report:
• Professional and business services added 51,000 jobs in October
• Retail trade added 36,000 jobs in October, with gains in motor vehicles and parts dealers (+7,000), and in furniture and home furnishings stores (+4,000)
• Leisure and hospitality continued to trend up (+28,000) over the month
• Construction was up slightly, but there was a gain in specialty trade contractors of +17,000
• Mining lost 9,000 jobs in October
• Manufacturing, transportation, information, finance and government were all unchanged
It’s hard to deny that this week brought us some decent numbers in an area of our economy that’s still struggling, but I remain vigilant.
The rise in unemployment rate is a reminder of the millions of Americans still without work, the rise in the participation may be a sign that they are at least getting confident enough to begin looking and thus be counted in the real rate. This thesis is supported by the recent positive trends in consumer confidence and sentiment.
The BLS noted that Sandy had no effect on this data and while I suspect that there will be a plethora of construction projects and temporary help on those jobsites, I’m concerned about what it will do to the recovery.
When the damage repaired, cities rebuilt and consumers have laid out millions over the next three to six months, does anyone agree that they might be tapped out and reducing their spending?
What about all those workers who know that the boom time is coming to an end; do you think that their spending will be curtailed as well?
Jared Levy is a senior equity strategist for Zacks.com