A Hint of a Pulse

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.......................................................................................meep!.....



The October employment report isn't really that good, but its soooo much better than what we've seen over the last few months... In particular, after falling for four consecutive months, nonfarm payroll employment rose by 151,000 in October.

The June-September reports looked so bad partly because the government was shedding workers (some of them temporary census workers). Because of this, some observers (and the White House) preferred to focus on private-sector payrolls, which have increased every month since January, albeit at a faltering pace. October's increase in private employment was 159,000, which was the best since April.

Of course, with 14.8 million unemployed, that's not nearly good enough to make a dent.  Essentially employment growth is back to a "treading water" pace, which only looks good after several months of drowning.

That is consistent with the headline number from the household survey: the unemployment rate was unchanged at 9.6% in October.  The underlying numbers aren't so hot - the number employed fell by 330,000 and the labor force participation rate fell from 64.7% to 64.5%.

Indeed, given the recent pace of real GDP growth (1.7% in the second quarter; 2% in the third, according to the advance estimate), we're lucky the unemployment rate hasn't risen, as Okun's law - which says that unemployment rises when growth is below 3% -  would imply.

Note that October is a month where the seasonal adjustment is downward; on a non-seasonally adjusted basis, payrolls increased 919,000 (private payrolls increased 409,000), and the unemployment rate fell to 9% (from 9.2% in September).

Paul Krugman refuses to be encouraged (of course):

So, we have a “strong” jobs report — with total employment still 7 1/2 million less than it was three years ago, we had job gains slightly higher than the number needed to keep up with population growth.
At this rate we’ll return to full employment around 2030 or so.