Economists React: ‘Hiring Didn’t Freeze as Feared’
Economists weigh in on the unexpectedly strong job growth in October, which saw 204,000 jobs added despite the government shutdown.
–Looks to us like hiring didn’t freeze as feared. The net impact is that the three month pace of hiring is now back to 202,000 or about 50,000 where it had recently fallen to. That brings the taper discussion back full circle. The Fed has long argued that on a cumulative basis the net improvement in the employment picture is significant enough to think about reducing the flow of purchases. And now we are back to the 200,000 marker once again and despite being fazed by fiscal fogs, the discussion is likely to happen soon. –Andrew Wilkinson of Miller Tabak & Co. LLC–Clearly, another report like this one will greatly increase the odds of tapering at that meeting. Our base case remains that it won’t happen then but the odds have substantially improved already with the release of these numbers.” –Ian Shepherdson of Pantheon Macroeconomics
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Also at Real Time Economics:
Five Takeaways from October Jobs Report
Forget the slowdown: Economists—including Federal Reserve policymakers—had been concerned about the apparent slowdown in job growth over the summer, but many weren’t convinced the trend was real. Friday’s report suggests the skeptics were right. October’s net gain of 204,000 jobs makes it one of the best months of the year. Perhaps even more importantly, the Labor Department revised up August and September’s job gains by a combined 60,000 jobs. The economy has now added an average of just over 200,000 jobs per month over the past three months; before today’s report, the three-month average stood at just 143,000 jobs. Even with the revisions, job growth remains far too slow given the depth of the recent recession—more than four years into the recovery, the U.S. still has nearly 1.5 million fewer jobs than before the crisis—but today’s report should ease fears that the economy is losing momentum.
Don’t stress the unemployment rate: The unemployment rate ticked up to 7.3%, but that’s likely due to October’s partial government shutdown, which left thousands of workers at home on furlough. For complicated reasons, furloughs didn’t affect the headline payroll figures but did affect the unemployment rate. The Labor Department reported that 1.5 million unemployed workers were on “temporary layoff” in October, nearly half a million more than the month before. (Some furloughed workers also apparently reported themselves, incorrectly, as employed.) A back-of-the-envelope calculation suggests the unemployment rate would have fallen to 7.0% without the unusual jump in temporary layoffs....MORE
