Unemployment Rate Tops 10%, But Temp Employment Shows Some Signs of Life

The inevitable has occurred; October’s unemployment rate rose to 10.2%–a 26 year high–, while nonfarm payrolls declined by -190,000.  The drop in payrolls was more or less in-line with my forecast of -185K, but much worse than the consensus forecast of -175K.  It isn’t all bad though, during my first glance at the data I noticed temporary workers rose 34K, which is the first rise since December 2007.  A rise in temp employment is typically a good forward looking indicator that companies could be preparing to once again hire.  Additionally, data for the two previous months has been revised significantly higher, which should help ease some of the pain.  The decline in September payrolls was revised to -219K from -263K, while August payrolls were revised to -154K from the -201K reported in September. Therefore, together this totaled to a positive revision of +91K to August and September payrolls.

Manufacturing employment dropped 61,000 in October,despite the strength in the ISM’s employment index. The construction industry’s payrolls fell by 62,000. The service sector lost 61,000 jobs in October, while goods-producing industries declined by 129,000. Education and health services gained 45,000 jobs, while government employment was unchanged.

More to come….