Today's Report (11/05/2021)

Total nonfarm payroll employment rose by 531,000 in October, and the unemployment rate edged down by 0.2 percentage points to 4.6%, the U.S. Bureau of Labor Statistics reported today. Job growth was widespread, with notable job gains in leisure and hospitality, in professional and business services, in manufacturing, and in transportation and warehousing. Employment in public education declined over the month.

The unemployment rate edged down to 4.6% in October. The number of unemployed persons, at 7.4 million, continued to trend down. Both measures are down considerably from their highs at the end of the February-April 2020 recession. However, they remain above their levels prior to the coronavirus (COVID-19) pandemic (3.5% and 5.7 million, respectively, in February 2020).

The labor force participation rate was unchanged at 61.6% in October and has remained within a narrow range of 61.4% to 61.7% since June 2020. The participation rate is 1.7 percentage points lower than in February 2020. The employment-population ratio, at 58.8%, was little changed over the month. This measure is up from its low of 51.3% in April 2020 but remains below the figure of 61.1% in February 2020.

In October, average hourly earnings for all employees on private nonfarm payrolls increased by 11 cents to $30.96, following large increases in the prior 6 months. Over the past 12 months, average hourly earnings have increased by 4.9%. In October, the average hourly earnings of private-sector production and nonsupervisory employees rose by 10 cents to $26.26.

Market Reaction

DXY - Following the release there was some sharp movement towards the upside with it then slowly ticking towards the downside.

S&P 500 - Following the release, there was some sharp movement towards the upside.

Gold - Following the release gold Whipsawed, sharply moving towards the downside before quickly moving towards the upside.

What Is It?

Nonfarm Payrolls report measures the number of jobs added or lost in the US economy over the last month, excluding farm workers and workers in a handful of other job classifications. This is measured by the Bureau of Labor Statistics (BLS), which surveys private and government entities throughout the US about their payrolls. The BLS reports the nonfarm payroll numbers to the public on a monthly basis through the closely followed “Employment Situation” report.

Why Is It Important?

The NFP report is a key economic indicator for the United States. It is intended to represent the total number of paid workers in the US minus farm employees, government employees, private household employees, and employees of nonprofit organizations.

What Are The Fundamental Effects?

Wages and salaries from employment make up the main source of household income. The more workers there are, the more they buy and propel the economy forward. If fewer people are working, spending drops off and businesses suffer. Both the Federal Reserve and the markets pay close attention.

How Does It Affect Markets?

CURRENCY - A strong report may drive interest rates higher, making the Dollar more attractive to foreign investors.

STOCKS - For stocks little or no growth in employment is generally bad for stocks. Weak sales shrink corporate income and earnings.

BONDS - A series of weak employment reports reflects a more sluggish economy, which may be bullish for bond prices and interest rates may head lower.