October 2019 U.S. Employment, ISM-MF Index

Robert A. Dye, Ph.D.

,

Daniel Sanabria

Newspaper

The official October labor data from the Bureau of Labor Statistics shows a net gain of 128,000 new jobs in October, beating market expectations of about +95k.



Better-Than-Expected Jobs Report, But Manufacturing Still Cooling

*     Payroll Employment increased by 128,000 net new jobs in October.
*     The Unemployment Rate for October inched up to 3.6 percent.
*     Average Hourly Earnings increased by 0.2 percent in October and were up 3.0 percent for the year.
*     The Average Workweek was unchanged at 34.4 hours.
*     The ISM Manufacturing Index for October increased to a still-contractionary 48.3.
*     September Construction Spending increased by 0.5 percent.

The official October labor data from the Bureau of Labor Statistics shows a net gain of 128,000 new jobs in October, beating market expectations of about +95k. The reason market expectations were so low is the now-resolved GM/UAW strike, which idled about 49,000 GM workers for 6 weeks, beginning in mid-September. On net, manufacturing employment was down 36,000 jobs for the month. That number will bounce back in November. Another big factor muddying the jobs number was the loss of 20,000 temporary government workers who were working on the upcoming 2020 Census. Revisions to August and September were strongly positive, adding a total of 95,000 more workers over the previous two months. The unemployment rate ticked up inconsequentially, to 3.6 percent. Average hourly earnings gained 0.2 percent for the month and were up 3.0 percent for the year. The average workweek for all employees was unchanged at 34.4 hours. All in, Wall Street will breathe a sigh of relief about this jobs report, which, cosmetically, could have been a lot worse. Despite being such a muddy and quirky report, with large temporary factors in play, analysts will chalk it up as a positive.

Mining and logging employment was unchanged in October. Construction was up by 10,000 workers. Manufacturing was down 36,000 workers. Automotive manufacturing was down by 41,600, which means that most other areas of manufacturing gained in October. Retail trade employment increased by 6,100 workers. Transportation and warehousing was up by 9,900. Utilities shaved off 1,400 jobs. Information services subtracted 4,000 jobs. Financial services counted an additional 16,000 employees. Professional and business services gained 22,000. Eds and meds added 39,000. Leisure and hospitality added an outsized 61,000 net new jobs in October. Total government employment was down by 3,000 jobs, with 20,000 temporary Census-related jobs gone.

The ISM Manufacturing Index was below 50 for the third consecutive month, increasing in October to 48.3, which means that the pace of decline in the manufacturing sector is a little slower. Nine out of ten sub-indexes were below 50 for the month, excluding only the new exports orders sub-index, which was barely positive at 50.4. Five out of eighteen industries reported growth in October. They were furniture, printing, food, wood products and computers/electronics. The twelve industries in contraction were primary metals, apparel, textiles, transportation equipment, plastics/rubber, machinery, chemicals, petroleum/coal, electrical, appliances, fabricated metals, miscellaneous manufacturing and paper. The end of the GM/UAW strike will help some of these industries firm up in late 2019. Anecdotal comments were mixed, but dominated by reports of softening demand. Even though the topline number improved, this is still a sobering report.

Construction spending in September increased by 0.5 percent, but it remains down by 2.0 percent from a year ago. Private residential spending gained 0.6 percent for the month. Private nonresidential slipped by 0.3 percent. Spending on government construction projects was up by 1.5 percent.

Market Reaction: U.S. equity markets opened with gains. The 10-Year T-bond yield is up to 1.72 percent. NYMEX crude oil is up to $55.21/barrel. Natural gas futures are down to $2.62/mmbtu.



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For a PDF version of this publication, please click here: October 2019 U.S. Employment

November 1, 2019
Robert A. Dye, Ph.D., Senior Vice President and Chief Economist at Comerica Bank

Robert A. Dye, Ph.D.

Senior Vice President and Chief Economist
Daniel Sanabria, Senior Economist at Comerica Bank

Daniel Sanabria

Senior Economist

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