Last jobs report before election: US recovery weak but the job situation improving
The final monthly jobs report before election day was released at 830 ET in Washington. I will be discussing these numbers and the US economy generally later today at 1215 ET on BBC World News. Tune in.
The key number, non-farm payrolls, showed an increase of 171,000 jobs in the month of October, above expectations for 125,000 jobs added. These figures are based off the establishment survey which polls businesses. Meanwhile, the household survey which polls individuals showed a marginal uptick in the unemployment rate from 7.8 to 7.9%.
These headline numbers are pretty neutral and don’t give a boost to either US presidential candidate. They show a slow and somewhat lacklustre economic improvement similar to what we witnessed after the last downturn in 2001. Digging deeper, the data was more favorable than the headline suggests. Here are a few reasons why:
- Economists had expected 125,000 new jobs to be added to non-farm payrolls. And the 171,000 figure was substantially above that number
- Prior revisions were significant – probably the biggest surprise. The change in total nonfarm payrolls for August was revised up from +142,000 to +192,000, while the change for September was revised up from +114,000 to +148,000 for a net revision gain of +84,000. Consistently positive backward revisions are a sign that the jobs market is improving better than previously believed.
- The labor force participation rate increased to 63.8%, a sign of discouraged workers coming back into the workforce.
- The employment-population ratio also increased, settling at 58.8%. The same logic holds here that higher employment-population rates show optimism about job prospects.
Bottom line: When revisions are included, this is a strong jobs report that will slightly boost President Obama. Overall, the US economic recovery remains weak but the job situation is improving more rapidly.
I may have more details for Pro subscribers later in the day.