U.S. Jobs Growth Rebounded Last Month The U.S. added 531,000 jobs in October and the unemployment rate fell to 4.6%, as the labor market rebounded from a summer lull.
The U.S. labor market sprang back to life in October after a summer slowdown, with employers briskly adding jobs and nearly 200,000 women joining the labor force.
The economy churned out 531,000 new jobs last month, the biggest gain in three months, the Labor Department said Friday. Restaurants, consulting firms and factories all boosted hiring, suggesting broad strength across the economy. Nationwide job growth was also stronger in August and September than previously estimated, with new data boosting employment over that period by 235,000 jobs.
Even with last month’s pickup in job growth to an average of 582,000 jobs a month this year, growth remained below the monthly average of 641,000 jobs that the economy created in the first seven months of the year.
The unemployment rate fell to 4.6% in October from 4.8% a month earlier, and is down by more than half a percentage point in just two months. (…)
About 180,000 female workers aged 16 and older joined the labor force in October, as Covid-19 cases declined and schools reopened. (…)
The average hourly wage for private-sector workers rose 0.4% in October from a month earlier and 4.9% compared with a year ago. In the 15 years before the pandemic, wages grew an average 2.5% a year. (…)
In October, the labor force grew by 104,000 people, entirely due to an increase in female workers. Participation among men fell. But the overall gain in the labor force was modest, leaving the participation rate at 61.6%, near the lowest level since the 1970s. (…)
Good thing Powell made “maximum employment” fuzzier last week. Participation rates are not recovering:
Aggregate weekly payrolls (employment x wages x hours) is up 9.3% YoY, stable growth since August. During the last 3 months, payrolls grew at a 10.2% annualized rate, very similar to the 10.0% rate of the previous 3 months. However, employment growth accounted for 28% of the growth since August, down from 51% during the May-July period. Wage growth is now running at a 5.3% annualized rate while weekly hours have stabilized at their cyclical peak.
Americans are gradually bringing their consumption growth in line with the growth in payrolls as the splurge on durable goods is abating. If employment keeps rising at about 600k per month (+0.4% MoM) and wages maintain their recent 0.4-0.5% pace, payrolls and nominal expenditures should keep rising 10% annualized through next spring. The “stag” part in stagflation seems unlikely for now.
- The year of revisions (Axios)
Sometimes the initial picture is only half the story. The October jobs report, out Friday, included considerable revisions to the tally of new jobs created in August and September — enough to change how we view the economy’s progress through the peak of the Delta variant.
It’s a reminder to step back and let the whole picture take shape. Throughout the pandemic recovery — a time with absolutely no modern economic precedent — the imperfections of gathering complex data have become all the more stark.
So far this year, the initial jobs number undershot the final estimate in all but one month, with an average of 99,000 in additional jobs per month subsequently added. In total, more than a million jobs have been added to the tally by way of revisions.
In the more predictable 2019, the average total revisions per month amounted to just 10,000, noted the White House Council for Economic Advisers in a tweet on Friday.
The data so far this year imply it would be reasonable to expect October’s red hot job gains to get revised even higher — and for September’s number to receive another lift as well.
Canada’s Jobs Engine Shifts Into Lower Gear With 31,000 Gain The economy added 31,200 jobs last month, Statistics Canada said Friday in Ottawa, missing expectations for a gain of 41,600 in a Bloomberg survey of economists. The unemployment rate fell to 6.7% from 6.9% in September, and total hours worked rose 1%. Average hourly wages for permanent workers were up 2.1% from a year earlier, suggesting the impact of rising consumer price inflation has yet to drive pay gains higher.
But, why is that?
A Hawkish Case for Fed Action on Inflation Emerges “Disruptions that initially appeared to be temporary bottlenecks driving up prices now look as if they may be more long-lasting,” Kansas City Fed chief Esther George said
(…) “I think transitory, to economists, means sort of not permanent,” Mr. Macklem said in an interview that aired on CTV’s Question Period. “I think to a lot of people, transitory means it’s going to be over quickly. … I don’t know exactly what the right word is, but it’s probably something like, ‘transitory but not short-lived.’”
Mr. Macklem pointed to the bank’s latest inflation projections, published on Oct. 27, which show the annual rate of inflation rising to close to 5 per cent for the remainder of the year, before dropping to around 2 per cent by the end of next year. The bank now expects inflation to average 3.4 per cent for the whole of next year, a full percentage point higher than its previous projection, from July. Inflation hit an 18-year high of 4.4 per cent in September. (…)
Unions Are on the Rise, But So Are the Robots
(…) There were a record 310,700 industrial robots operating in the U.S. last year, up 6% from 2019, according to a report from the International Federation of Robotics released late last week. New robot installations actually declined in the U.S. last year as the financial strains of the pandemic weighed on corporate spending, but manufacturing headcount also fell, boosting the ratio of robots to humans.
There were 255 industrial robots operating for every 10,000 manufacturing employees last year, compared with 229 in 2019, IFR data show. That growth boosted the U.S. two spots on IFR’s country-by-country comparison of robot density, and the country now sits in seventh place globally. But the real growth is just getting started. The IFR projects that North American robot installations will grow 17% in 2021 and that a “post-crisis boom” will continue to fuel low double-digit growth rates in 2022 and beyond. (…)
Indeed, the recently concluded earnings and fall conference season was littered with comments about automation investments. Garbage-hauler Waste Management Inc. found upgrading and rebuilding its single-stream recycling plants can reduce the labor needed to operate them by 35%-plus. The company has accelerated this overhaul and now expects to revamp 90% of this volume by 2023 or 2024. “Certain jobs simply don’t attract the interest they previously did,” CEO James Fish said.
In the biopharma sector, “we can get to the point where we’re automating a lot of the small-scale assembly and a lot of the inspection processes,” Rich Tobin, CEO of pump-maker Dover Corp., said at an investor conference in September. “Our ability to expand capacity in colder products on the biopharma side has not required the traditional amount of labor that [it would have] if we had done this project four or five years ago.” Air-conditioner maker Carrier Global Corp. has increased its investments in automation by 50% this year and expects those systems to have churned out 6 million hours of manufacturing work by the end of 2026, CEO Dave Gitlin said. Toolmaker Stanley Black & Decker Inc., which has committed to moving big chunks of its China-based supply chain to the U.S., highlighted automation projects underway at a facility in Charlotte, North Carolina. (…)
This IFR presentation has lots of interesting charts, most of which are not very flattering for the U.S. compared to China. It seems that robots did nit get the MAGA memo. Just when we really need a productivity boost.
Yes, America is forecast to grow its robots installations 30% between 2021 and 2021, bettering Australasia’s 21%. But compared to 2019, growth is 28% vs 48%.
EARNINGS WATCH
Through Nov. 5, 445 companies in the S&P 500 Index have reported earnings for Q3 2021. Of these companies, 80.7% reported earnings above analyst expectations and 14.6% reported earnings below analyst expectations. In a typical quarter (since 1994), 66% of companies beat estimates and 20% miss estimates. Over the past four quarters, 85% of companies beat the estimates and 12% missed estimates.
In aggregate, companies are reporting earnings that are 10.7% above estimates, which compares to a long-term (since 1994) average surprise factor of 4.0% and the average surprise factor over the prior four quarters of 18.3%.
Of these companies, 76.2% reported revenue above analyst expectations and 23.8% reported revenue below analyst expectations. In a typical quarter (since 2002), 61% of companies beat estimates and 39% miss estimates. Over the past four quarters, 79% of companies beat the estimates and 21% missed estimates.
In aggregate, companies are reporting revenues that are 2.7% above estimates, which compares to a long-term (since 2002) average surprise factor of 1.2% and the average surprise factor over the prior four quarters of 4.1%.
The estimated earnings growth rate for the S&P 500 for 21Q3 is 41.5%. If the energy sector is excluded, the growth rate declines to 33.2%. The estimated revenue growth rate for the S&P 500 for 21Q3 is 16.2%. If the energy sector is excluded, the growth rate declines to 12.8%.
The estimated earnings growth rate for the S&P 500 for 21Q4 is 21.8%. If the energy sector is excluded, the growth rate declines to 14.6%.
Analysts keep revising upwards:
Even though more companies are warning negatively:
TECHNICALS WATCH
Last week’s bounce in small caps is a positive sign that investor interest is broadening.
The large caps 13/34–Week EMA Trend is back on its solid trend.
CANADA ON THE CHEAP!
From my old friend John Aitkens:
Fiera Capital’s excellent team of strategists currently expects that U.S. and international equities will offer negative returns in the next 12-18 months but that Canadian equities, thanks to their resource bias, will fare positively in a reflationary recovery scenario (50% probability). A stagflation scenario (40%) would take all investors in double digit red numbers however.
China Bond Rout Shifts From Evergrande to Other Big Developers
Xi lays groundwork for third term by adopting Mao and Deng’s power ploy Chinese president expected to be elevated into Communist pantheon at annual party meeting
The sheer scale of China’s need for farm commodities including soybeans make it likely that the country would need to turn to the U.S. eventually, said Terry Reilly, senior agriculture futures analyst at brokerage firm Futures International. (…) 
Archer Daniels Midland
This Reuters’ headline is not supported by any factual “White House rhetoric” in the body of the article. I searched around and really found nothing to support that. Same with this other Reuters’ headline: 