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The Employment Situation for October - Not Good News

Focusing on the big picture, gains in employment need to outpace growth in the labor force to bring the unemployment rate down. The labor force is growing again after slowing dramatically and contracting through the recession.

Bureau of Labor Statistics released the Employment Situation report describing October's net addition of 80,000 to payroll employment as trending up.

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The decline in the unemployment rate to 9 percent from 9.1 was characterized as little changed.

The increase of 277,000 in the number of employed persons and the lesser 181,000 increase in the civilian labor force, pushes the rate down. These are both below the 400,000 threshold needed for a statistically significant change in the household survey.

But payrolls trending up is a tougher call. The revisions to the August number were unusually large and unusually lopsided, moving the initial estimate from 0 to 104,000. The upward first revision to September was on the high side (+55,000) and may be reduced with the November revision given that the first and second revisions have tended to be offsetting so far this year.

There seems to be little evidence that the government sector is going to stop shedding jobs anytime soon. This picture is a little less optimistic than the monthly average increase of 125,000 over the last 12 months. The subpar pace of job creation reflected in today's report suggests the unemployment rate could go higher before moving down substantially.

- Courtesy of NAHB

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December 14, 2019, 7:56 am PDT

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