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Nonfarm Payrolls Jump in October

·3 min read
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We see a simply terrific Employment Situation number this morning for the month of October, from the U.S. Bureau of Labor Statistics (BLS): 531K new non-farm jobs were created last month, up from an expected 450K, and a new post-pandemic low Unemployment Rate to 4.6% from 4.8% last time around. The private sector alone brought 604K jobs, more than a third of which came from the Leisure & Hospitality and Professional & Business Services sectors.

Revisions to the previous two months were also good news that’s largely better than expected: September’s major disappointment headline of 194K is revised way up to 312K, and August’s admirable 366K moves up to 483K. This brings our trailing three-month average up to 442K per month — certainly in the range where job growth has come back in a meaningful way.

Average Hourly Earnings grew +0.4%, just as expected and down from the +0.6% in September, Wages are up overall +4.9% year over year, however, which may be the more important metric. How long will we be able to grow wages at 5% per year without seeing inflation take a big bite out of the economy — including out ability to be competitive globally?

The answer will likely be how productive the labor force proves to be, and here there is definitely room for improvement. Labor Force Participation came in at 61.6%, which is actually down a tick and 100 basis points lower than where we were before the pandemic. Average Hours Worked fell to 34.7. Government jobs lost -73K in October, of which a big part are teacher and child care jobs.

Leisure & Hospitality jobs grew +164K, followed by Pro/Business Services at +100K. Manufacturing came in at 60K for the month, also a healthy number. Restaurant, hotel and drinking establishment jobs are still down -8.2% from pre-pandemic levels, though the industry has grown by 2.4 million workers.

Pre-market futures went into the green on the news, with the Dow looking to bounce back from its first down day in a week Thursday, +140 points ahead of the bell. The S&P 500 is +20 points at this hour, with the Nasdaq +50.

Part of this resurgence in buoyant optimism comes from news out of Pfizer’s PFE labs, where an anti-viral pill proven 89% effective against severe Covid illness — including the Delta variant — has been announced. The company said its study is no longer taking new patients in the clinical trial “due to overwhelming efficacy.” This has helped propel Pfizer shares up nearly +10% in Friday’s pre-market.

Even bigger, according to Dr Scott Gottlieb on this morning’s “Squawk Box” on CNBC: this may well mark the end of the pandemic phase of Covid-19, at least in the U.S. Between vaccinated Americans, those who’ve been infected by the coronavirus or both amount to roughly 90% of some form of immunity from this disease. Gottlieb does not expect Covid to disappear forever; he called it an “endemic” which will be with us going forward, but with things like the Pfizer pill (Pfizer is a company where Gottlieb has a seat on the board) keeping people from getting severe Covid symptoms, the end of this pandemic war looks to be in sight.

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