Economist Alvin Liew at UOB Group gave his views on the recent results from October’s Non-farm Payrolls.
Key Quotes
“October’s employment situation rose above expectations, giving assurance that the US economy is indeed still “in a good place.” After missing expectations for two straight months, the US Labor Market report on Friday (1 Nov) showed a better-than-expected pace of 128,000 jobs added in October”¦ despite the expected drag from manufacturing job losses (-36,000, which is quite good considering markets were expecting 55,000 job losses) due to strikes at a major US car maker. In addition, more cheer was added to the employment situation with a very sizeable 95,000 upward revision of payrolls for the preceding two months”¦ Job creation is now averaging at 167,000 monthly so far this year (from 161,000 previously), but still below the 223,000 monthly average recorded for 2018″.
“Within the private sector, job creation was mainly concentrated in services industries (157,000) while goods-producing industries lost 26,000 jobs which was largely due to manufacturing job losses mainly reflecting the 41,600 jobs losses in the motor vehicles and parts industry (which suffered a strike at a major US car maker in October but has since been settled) while construction sector added a steady 10,000 new jobs (from 11,000 in September)”.
“US unemployment rate edged up slightly to 3.6% in October (from 3.5% in Sep) on the back of a higher labor participation rate of 63.3% (from 63.2% in Sep), but it is still very near to the 50-year lows. US wage growth came in slightly below market expectations, rising by 0.2% m/m from 0.0% m/m in September (a small miss from Bloomberg median estimate of 0.3%). That said, compared to a year ago, US wage growth went back to the 3.0% y/y rate, and importantly, September’s wage growth was revised higher to 3.0% y/y (from 2.9% previously), meaning that the US wage growth has stayed at 3% or higher since October 2018″.
“The surprisingly strong October jobs prints and the upward revisions to August and September jobs creation, gave assurance that the US economic growth pace remains intact and validated the outlook for the Fed Reserve to be on pause (in the next December 2019 FOMC) after delivering 3 rate cuts since July 2019″.
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