US Labour Markets Still Strong

The 128k rise in October's non-farm payrolls beat a genuinely muted consensus (90k only), even whilst being signally weaker than the 171k which was averaged throughout Jan-Sept. This should not disguise the fact that the twin labour market reports showed unexpected strength. It came in two main aspects:

First, there were sharp upward revisions for the previous two months' results. August's non-farm payrolls were originally announced at 168k, and this was revised up to striking 219k; September's payrolls were originally given as 136k, but this was revised up to 180k. In other words, during August-September, the rise in non-farm payrolls was actually 31% higher than previously thought. It's not a trivial revision.

Second, labour participation rates continue to rise: although the rise was only 0.1pp in October, it took the rate to 63.3%, the highest since September 2013. The long grind upwards in participation is gradually rediscovering that portion of the labour force lost in the aftermath of the financial crisis. As it moves up, so should estimates of the US's sustainable growth rate.