Blow out number this morning: Non-farm payrolls grew by 337,000 in October, the fastest pace in seven months, nearly triple September’s number, and way above the average forecast of economists (192,000 increase in payrolls).

The Labor Department also revised its estimates of payrolls growth for September and August. Employers added 198,000 jobs in August and 139,000 in September. Previous estimates had shown a 128,000 increase in August and a 96,000 increase in September.

The strong job growth drew previously discouraged workers back into the civilian labor force, expanding it by 367,000 to 147.9 million. The unemployment rate, as a result, rose a tenth of a percentage point to 5.5%. Most economists now expect jobs to grow at a pace of 200,000 a month for the remainder of the year, although the unemployment rate isn’t expected to fall much. When it rains, it pours . . .

Here’s Joshua Shapiro (Chief U.S. Economist of Maria Fiorini Ramirez):

"While this was a strong report in terms of job creation, we do not believe that it ought to be extrapolated into the future. With corporate profit margins under pressure from a lack of pricing power, higher commodity prices and slower productivity growth (resulting in faster gains in unit labor costs), it is likely that cost-control will remain a key business strategy. It is thus unlikely that rapid payroll growth will be sustained on a trend basis until some pricing power returns to the corporate sector and profit margins can therefore be maintained even if hiring accelerates. Moreover, a payroll increase of 337K is stronger than indicated by other labor market evidence (jobless claims, consumer confidence/sentiment, etc.), which is also reason not to take this number and run too far with it."

Source:

U.S. Nonfarm Payrolls Increase by 337,000
By JOSEPH REBELLO and PAULETTE CHU
DOW JONES NEWSWIRES November 5, 2004 9:11 a.m.
http://online.wsj.com/article/0,,SB109966096217666030,00.html

Category: Economy

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