Very noisy report which makes analysis hard. Obviously, did not show the upside surprise that ADP did. Which begs the question, since ADP covered the entire month of October (survey 30th), and NFP was the survey week of the 12th, I misread the read through from ADP to NFP. ADP would be the clean full month read, NFP would be noisy. I previously thought NFP since the 12th was survey week would be less impacted by hurricane. Doesn’t seem to be the case.
First of all, we have the 41k Boeing strikes. This impacted manufacturing employment. Construction jobs were positive again, government consistent at 40k, health care is 51k from 81k last month, but still strong.
Work week, hourly wages and unemployment rate were not impacted because they were due to the household report and not establishment report.
So where are the hurricane impacts?
512k people were employed but absent from work due to weather. Anyone who worked on an hourly wage would actually be unemployed, then re-employed after.
People working part-time due to weather also rose to 1% of total employment. That’s 1.615MM people.
More importantly, part time for economic reasons actually declined, not rose.
So I am inclined to say ADP is the more accurate report, but the downward revisions take some steam here no doubt. About 110k of downward revisions to prior months does take some steam and pressure off the Fed to urgently pause. They can still talk dovish if they feel like it with a little bit less of an egg on their face than was case prior to today.
I would also point out that a typical NFP report has a standard error of 110k or so. We just saw huge downward revisions get revised up, now down again. This report is thus impossible to read and I don’t think we should overreact to it.