October Employment Report is Strong

The October Employment Report is strong.  The underlying Payrolls are stronger than the +128k print, and the uptick in the Unemployment Rate shows greater participation in the labor force not softer demand.

 While Nonfarm Payrolls printed +128k m/m, they were held down by two one-off factors: 46k GM strikers and 17k fewer census workers.   Excluding these two factors, Payrolls would have risen 191k.  Moreover, there were layoffs outside of GM that resulted because of the strike.  They, too, should be temporary.  The composition of the Payroll gain shows notable increases in Construction (both residential and nonresidential) and Retail (possibly setting up for the holiday season).

The uptick in the Unemployment Rate to 3.6% from 3.5% resulted from an increase in the Labor Force Participation Rate.  This caused Labor Force to climb by more than the very decent +241k increase in Civilian Employment.  A rising Participation Rate -- which runs counter to the demographically-driven downtrend in the Rate (as more older people retire) -- boosts the potential growth rate of the economy.

The Nonfarm Workweek was steady at 34.4 Hours.  This, too, is a strong showing, sine it could have been negatively impacted by the GM strike.   The workweek in manufacturing, indeed, fell m/m.

The 0.2% m/m increase in Average Hourly Earnings also is stronger than it appears.  Calendar considerations and the compositional impact of the GM strike could have held it down by more.  Along with the upward revision to September to +0.4% from +0.3%, the y/y was steady at 3.0% -- still in line with trend.