Thread by @DanielAlpert

#NFP Expecting a strong number today. The headline will not be impacted by the loss of government education jobs we saw in September and I expect private sector to show far more strength with the ending of supplemented unemployment benefits now fully filtered through the data.

#NFP As a result of the above, I see the number as likely to exceed expectations of 450K to 475K, with a decent shot of well-exceeding that range. But the test week was the week ending October 17th, and activity has increased measurably after that with improving COVID data.

#NonFarmPayrolls come in at 531,000 in October as the Unemployment Rate registers 4.6%. Now let's look at the details underneath the headlines as we await the @jobqualityindex data.

Private sector payrolls grow 604,000 in October, a really strong outcome as I had expected. The growth in goods producing jobs at 108K is stunning - about 60% manufacturing and 40% construction. People are going back to the lower paying service jobs too...stay with me.

Over half of the uptick (at least 328K of the 604K) were in the traditional low-wage/low-hours sectors that had been desperate for workers: Retail, Administrative and Waste, Healthcare and Social Assistance, Leisure and Hospitality and Other.

We did lose about 70,000 more headline jobs in the state and local government education sectors in October. This is still the remnant of what I believe is mostly statistical noise associated with seasonal issues that have been buffeted by the pandemic. We will see.

Hourly wages grew by 0.35% M/M but hours worked fell by 1/10th to 34.7 so weekly incomes grew by only 0.07% M/M. Most of that growth, across the board, was in services. Goods producing jobs have already seen their big bumps.

The @jobqualityindex JQInstant read indicates that 62.52% of the private sector jobs added in October were in the low-wage/low-hours sectors offering less than the average weekly income for all jobs. These are the bulk of jobs remaining to be filled and, slowly, they are.

Relative to the inflation story, remember - this is all about AGGREGATE demand. The slower rise in weekly incomes (forget about hourly wages) is due to decrease in hours worked resulting from more low-hours service jobs being added back to the mix (also a decline in construction)

As more of these low-wage/low-hours jobs are filled next month, it will place a cap on the rise in averages across the board and may even see some monthly declines in weekly incomes, again in hours, and even hourly wages at some point.

This was a strong report, especially if you ignore the anomalous behavior of government education jobs. The labor force increased at a rate in October in excess of the participation rate (73.2% vs 61.6%) which is something to watch going forward, even if the LFPR was flat.

And the strength in the growth of private sector payrolls, particularly at the low end of the income scale, should start to put to rest the "Great Resignation" nonsense. We had a "Great Recess," maybe. But recess is about over, as I explained here:

https://twitter.com/DanielAlpert/status/1453129547210166277?s=20

I realize the participation rate is a clear focus of the Fed's, but the M/M change under present circumstances is less important than whether we are keeping track with population growth (or doing at least a little better). Right now let's focus on U-3 and U-6 (but just for now!).

The @jobqualityindex report for October is now up.
We are proud to preview the coming announcement of the transfer of operation of the index to the @UBuffalo School of Management, where it will reside in the future. A new site will be launched next month!
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