While a still uncertain outcome of the US Presidential election remains top of mind, the economic calendar was also quite full this week, including the October employment report, an update from the Federal Open Market Committee (FOMC), and key data on US manufacturing trends.
U.S. nonfarm payrolls were stronger than expected, up 638,000 in October versus expectations of 580,000. Payrolls for August and September were also revised up by a total of 15,000. On a cumulative basis, the labor market has added nearly 12.1 million jobs in the past 6 months, more than half the 22.2 million lost in March and April. The unemployment rate declined to 6.9% in October (versus expectations of 7.6%) from 7.9% in September. Workers who classified themselves as employed but absent from work in the November survey understated the unemployment rate by about 0.3%. The U-6 underemployment rate, which includes those who are marginally attached to the labor force and employed part time for economic reasons, remained high but eased to 12.1% in October from 12.8% in September. The labor participation rate increased to 61.7% in October from 61.4% in September but remains well below the pre-pandemic level. The US labor market has improved significantly from the spring, but it is still a long way from a full recovery as more than 11 million people remain unemployed. Given a resurgence of the virus across many parts of the US, we believe the labor market is likely to remain challenged over the near-term.