Oct Payrolls a pleasant surprise

Oct private payrolls added 159k private sector jobs, twice expectations of 80k and the prior two months were revised higher by a net 93k. In contrast, the household survey fell by 330k and combined with a 254k drop in the labor force, the unemployment rate was unchanged at 9.6%. The all in rate fell .1% to 17%. The manufacturing sector unexpectedly shed jobs but was more than offset by retail, trade, temp jobs, construction and education/health. The average duration of unemployment did tick higher but the average workweek did rise to 34.3, matching the best since Nov ’08. State government jobs were unchanged unexpectedly while local government’s shed a net 7k. Both are where more job losses are expected. Average hourly earnings rose .2% m/o/m, in line. Net-net, a solid report relative to expectations and let’s hope sustainable but if it is and inflation continues higher, the Fed’s job in suppressing interest rates will get really tough.

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