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The US published an excellent jobs report – a gain of 171K jobs in October and the unemployment rate now rises to 7.9%, but this is due to a significant rise in the participation rate. In addition, revisions added no less than 84K to the initial report, similar to the huge revisions seen last month. So, the economic situaiton looks better in the US. 4 days before the presidential elections., Expectations were for a gain of 123K (perhaps they were higher after the ADP report) and an unemployment rate of 7.9%. Last month saw +114K and 7.8% before revisions.  

EUR/USD traded under 1.29 before the release, USD/JPY was around 80.24. The dollar is initially stronger against both, USD/JPY challenges 80.60 resistance.

The details :

  • Non Farm Payrolls: +171K
  • Participation rate: 63.8%.
  • Unemployment rate: 7.9%
  • Revisions: A whopping 84K +34K for September: from 114K to 148K and August from 142K to 192K.
  • Private sector NFP: +184K, better than expected. (ADP showed a strong gain of 158K)
  • Real unemployment rate (U-6): Down from 14.7% to 14.6%.
  • Employment to population ratio: unchanged at 58.8%.
  • Average hourly earnings: 0%, below +0.2% that was expected.

Hurricane Sandy had no effect on the report, according to the BLS.

It’s important to remember that the unemployment rate  became less important after Ben Bernanke referred to it in the post QE3 press conference:the Fed is not looking only at the unemployment rate, but also at the bigger picture: participation rate, employment to population, etc.

Regarding the elections, the report is more mixed, as the unemployment rate rose while many jobs were gained. So, the outcome depends more on the organization on election day (as well as other factors), and less on this report.