Jobs report modestly positive

Although the change in private payrolls was less than expected (104K vs. 125K), upward revisions to recent months were unusually large, with the result that, according to the establishment survey, there are 188,000 more private sector jobs today than we thought there were last month. Moreover, the household survey turned up a gain of 346,000 jobs in October.

To smooth out the normal monthly volatility in all these series, it usually helps to look at what is happening over the last six months. As the chart above shows, both the establishment and the household surveys now agree that the economy has added private sector jobs at the annualized rate of 1.4%. That works out to an average of 120K new private sector jobs per month. All that does, however, is keep the unemployment rate from rising, since the labor force tends to grow about 1% per year on average, thus adding about 120K job seekers to the mix every month.

This report also showed that the decline in public sector jobs, which began almost three years ago, is still ongoing. From a macro perspective, that's a good thing, since it addresses one of our biggest problems: public sector bloat (which we share with many European countries, unfortunately). This had better continue, though, since the public sector workforce is still 1.5 million larger today than it was in early 2000 (for a gain of almost 7%). The private sector workforce, however, is still 0.6 million smaller (for a loss of 0.6%).

Overall, I would call the October jobs report modestly positive, especially since it soundly refutes the notion that the economy is struggling and on the verge of another recession. Instead, it clearly shows that the economy continues to grow, albeit at a frustratingly slow pace.