Yes, the strong gain of 204K jobs may have been distorted by the government shutdown. And indeed, there will be a cleaner NFP report for November before the next Fed decision on December 18th. We will also get revisions of the strong but suspicious GDP report for Q3.
Nevertheless, there are a few positive points in this report which strengthen the case for QE tapering in December, and strengthen the dollar.
As counting of government jobs was distorted, we can focus on private sector jobs. Here, a gain of 212K was recorded. This is not “strong growth” just yet, but it could be classified as sustainable.
In addition, the positive revisions of previous data, 60K, place the average job gains on 190K in the past 12 months. This is quite close to the 200K gain / month gain that the Fed sometimes mentioned as sustainable.
If the private sector in the US continues showing us that it is resilient to the political crisis in October and to another potential crisis in early 2014, the Fed could begin tapering in order to be seen as preventing a bubble, and on the way, it will also put pressure on politicians to get their act together.
If Wall Street will suffer due to the tapering, it might pressure politicians not to add more pressure.
Not that long ago, it seemed that tapering would only be seen in March or April. After the FOMC decision, the strong PMIs and this report, the Fed could certainly stay on course with the roadmap from June: begin tapering in late 2013 and end QE altogether in mid 2014.
What do you think? Will Bernanke taper or leave it to Yellen?
Further: Taper buzz is in the air