Market Outlook for Next Week (11/9–11/13) ② 'The Resilient US Economy in Contrast to the Decline in US Stocks'

1. Introduction

The latest US employment report was quite strong. Non-farm payrolls increased by 165,000 in October, significantly exceeding the market expectation of an increase of about 60,000. Furthermore, the figures for August and September were revised upward by a total of 84,000. The previous report for September had raised concerns that the US job creation capacity itself might be weakening, but this time, that view will likely need to be adjusted slightly. Moreover, the household survey showed an increase of 463,000 in the number of employed persons, and the unemployment rate fell from 4.2% to 4.1% as the labor force participation rate rose. The number of full-time workers also increased significantly.
What was confirmed this time is a ‘recovery in job creation capacity,’ and while it is not necessarily a ‘comprehensive improvement in the quality of the labor market,’ labor market improvement is a key theme when considering the state of the US economy. In this report, we will monitor the state of the US economy with a focus on the employment statistics.

2. Summary of Employment Statistics

• Non-farm payrolls +165,000, 3-month average +137,000

• August revised up to +186,000, September to +60,000. Total for the past two months +84,000

• Private employment +159,000, government employment +6,000

• Household survey employed +463,000, labor force +421,000

• Labor force participation rate 61.9%, employment-to-population ratio 59.3%

• Prime Age participation rate (25–54): 83.7% in September. Unchanged in October.

• Unemployment rate 4.1%, U6 (broad unemployment rate) 7.9%

• Full-time workers +714,000, part-time workers -242,000

• Part-time for economic reasons +339,000

• Long-term unemployed (27 weeks or more) 1.963 million

• Multiple job holders 8.805 million, -181,000 from the previous month

• Average hourly earnings +0.4% month-on-month, +3.1% year-on-year

• Average weekly hours 34.4 hours

• Average weekly earnings $1,307.20, approximately +3.7% year-on-year

This employment report suggests that there may have been a slight change in the ‘Low Hire, Low Fire’ pattern that had continued until the previous month. This is because corporate new hiring is beginning to recover while layoffs remain at a low level. However, it is still only one month of improvement, and it is too early to judge that the hiring market has fully re-accelerated.