The number of new jobs, 271 000, is strong in October. In absolute terms this is remarkable. The question we must ask is the following: is it a change in trend or just a catch up after two mediocre months?
If this is a change in trend with a November figure consistent with that of October then this increase, for sure, the likelihood of Fed rate hike in December. This is the reasoning that one often reads, at least implicitly, this afternoon. If it’s just a catch then the question of a change of Fed’s strategy remains.
The problem is this: In the last three months (August, September, and October 2015), average job creations were 187,000 after 243,000 in the previous three months. In 2014, for the same 3 months the figure was 228,000 and that of the previous three months was 257 000. The profile is similar but at a lower level than in 2014. There are no additional tensions spontaneously when we look at the data.
This can be seen in the following graph, the purple bars were significantly weaker in August and September this year than last year.
Two very positive points of the report on employment
1 – The reduction of part-time work for economic reasons. The decline is strong in October but the level is still well above the average level observed in the previous cycle. This decline reflects a significant reduction of inefficiencies in the labor market and is an important and positive element.
Philippe Waechter, Natixis Global Asset Management
