The October employment report was expected to be weak at +90k jobs due to a General Motors strike. Instead the report was quite strong with job gains of +128k, and sharp upward revisions of +92k from the previous two months. Outside of manufacturing gains were widespread across industries. The labor force grew for the sixth consecutive month, driving the participation rate up +0.1pp to 68.3%, the highest in over six years. The increase in participation did nudge the unemployment rate up to 3.6%, just above the 50-year record low of 3.5% set in September. The one slight drawback in the report was that wage growth remained unchanged at +3% y/y. In a separate report, the ISM services index, covering around 85% of the economy, rebounded +2.1 points in October to 54.7, well into expansionary territory. But manufacturing continues to struggle. Despite a small gain, the ISM manufacturing index remains in contraction at 48.3, and nine of the ten components are also in contraction.
