Surprising Strength in New Jobs Numbers for October

The U.S. unexpectedly added 166k (consensus 85k) new jobs in October. This was the largest monthly increase since May, and is primarily due to a surprising increase in service sector labor demand. September's figure was revised down to 96k from the 110k originally reported. The unemployment rate held steady at 4.7%, after bottoming at 4.4% in March.

Factory payrolls fell -21k, a slight acceleration in job losses from the -17k of the prior month. Builders shed fewer jobs in October, -5k versus -14k the prior month. Retailers eliminated 21.5k jobs. Surprisingly, service industries, which include the finance sector (+2k in Oct), added 190k new jobs in October after growing by only 127k in September. Business service jobs grew by 65k, including 20k new temporary jobs, plus education and health grew by 43k and leisure/hospitality rose by 56k. The government added 36k jobs last month.

Wage growth slowed to only +.2% MoM and 3.8% YoY as the workweek held constant at 33.8 hours. Average hourly earnings for employees in October was $17.58. The manufacturing workweek fell to 41.2 hours from 41.3 hours in September, but overtime held steady at 4.1 hours for the third month in a row.

In contrast to the employer survey, the household survey showed a -250k loss of jobs. The only reason the unemployment rate didn't rise is because 200k people left the workforce last month. The labor force participation rate fell to 65.9%, and the share of companies hiring fell over 2% to 53.4% in October.