It was hard to believe Thursday stock market rally because there was not much good news to support it. Yes, another shot of steroids from the Federal Reserve but that’s not the kind of thing that typically gets investors’ animal spirits stirring. But Friday’s Jobs report, that’s another matter. This report has hopeful signs aplenty. America added 151,000 jobs in October–more than double what Wall Street had been expecting. What’s more, the report from Labor contained revisions on prior months. September, for example was revised to reflect the loss of 41,000 jobs in September, down from the original estimate of 95,000 jobs lost. The unemployment rate, based on a separate household survey, stayed at 9.6%. It has been above 9% for more than a year.The latest improvement in employment, while just one month of data, is an encouraging sign because it goes at the weakest part of the economic engine, the consumer. People aren’t spending because they are either out of work or anxious about the possibility. Yes, they also have mountains of debt to pay down but the grip of austerity is made all the tighter by the bleak numbers we’ve been seeing on jobs. Hopefully the fear factor will begin to ebb, especially as retailers head into their biggest season.
The other bit of good news here is that business attitudes may be changing. Companies have been stockpiling cash and postponing big capital commitments. They have also kept their payrolls slim out of fear that the economy could double dip. At some point they have to shift from that fear to a more bullish anxiety–the worry about having the capacity–and the skilled employees–to meet rising demand. There is some momentum building in the private employment sector, where jobs have been added for several months now.
Of course, it’s not all sweet music on the labor front. Here are some more sobering stats in the report:
Among the major worker groups, the unemployment rate for adult men (9.7 percent), adult women (8.1 percent), teenagers (27.1 percent), whites (8.8 percent), blacks (15.7 percent), and Hispanics (12.6 per-cent) showed little change in October. The jobless rate for Asians was 7.1 percent, not seasonally adjusted. (See tables A-1, A-2, and A-3.)
The number of long-term unemployed (those jobless for 27 weeks and over) was about unchanged over the month at 6.2 million. In October, 41.8 percent of unemployed persons had been jobless for 27 weeks or more.
Also, as the folks at High Frequency Economics point out, some of the gains in the October report are coming from the education sector, and that’s not a sustainable trend. But their early conclusion reflects the general surprise among analysts. As they noted after the report was released, “We had not been expecting sustained private payrolls at this until next spring, and this could easily be a fluke. But for now it looks good.”