Nonfarm Payrolls Rise 204K as Participation Drops to 35 year Low and Overall Employment Drops by Most Since March 2009November 08, 2013
Today’s employment report was…interesting. While the headline number of 204K jobs added in October was above expectations of 163K new jobs and has been widely read as welcome sign that the labor market is on the mend, the details were a little messier (to say the least). The household employment survey indicated that overall employment contracted by 735K in October (the largest drop since March of 2009) and in sympathy the participation rate has now fallen to a fresh 35 year low. And while we would’t count ourselves as strict believers in the Phillips Curve, we do observe the long standing relationship between the labor force participation rate and CPI inflation and note that the current trajectory of the participation rate would not exactly have the Fed on a tapering path anytime soon.
On the bright side, though, our nominal income proxy (which is payroll employment*average weekly hours worked*average hourly earnings) at least remained flat for the month.