Siren Song: October Employment

Takeaway: Below is an excerpt from an institutional macro note published this afternoon about today's unemployment report.

Relax, Bro!   Its easy to go full myopia on Jobs Friday.  I try my best to take a detached view of the mania. 


October payrolls, with a net gain of +214K, was disappointing both vs. consensus expectations and in the context of very strong Initial claims and employment survey indices (ADP, ISM, etc).  


Does a sequential slowdown in NFP signal a negative inflection in the domestic labor market – particularly given a negative birth-death drag, squirrely seasonals, a hard comp, declining slack and improving household survey metrics?  


I don’t know, but that feels like a stretched read-through on a single month of data.  


However, remaining willfully blind to the reality that we are late cycle and cresting from a fundamental perspective (alongside an ROW slowdown) feels equally myopic.   


Siren Song: October Employment - 1


Thinking like a Fed Head:   The prevailing view form a policy makers perspective is probably something akin to the following:


Payroll gains remain >200K and the trailing averages remain strong and the unemployment rate continues to decline (for mixed reasons) as do broader measures of labor slack.


Employment growth in the 20-35 YOA bucket is accelerating and the here-to mired 45-54 YOA bucket has had its first 4-month string of positive employment growth in the post-recession period. 


Wage Inflation remains stubbornly stagnant but that's trend consistent and should improve as we move incrementally towards constrained capacity and reduced labor supply.  At any rate, aggregate disposable personal income growth is accelerating and remains at post-recession highs currently. 


All-in, the October payroll report (in isolation) = status quo for the current policy course.  


Siren Song: October Employment - 2


Siren Song: October Employment - 3





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