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Friday’s employment report for October was a good one all around, headlined by a solid 161,000 monthly increase in nonfarm payrolls, on top of a 44,000 upward revision for the September figure (bringing it to 191,000). While manufacturing payrolls declined again, most other segments posted gains, and the unemployment rate dropped one-tenth to 4.9%. A report highlight was the strong monthly increase of 0.4% in average hourly earnings, bringing the Y/Y rate to 2.8%. This represents the strongest annual wage growth since June 2009.
The September Personal Income and Outlays report was generally positive, although with softness in some areas. Personal income rose a respectable 0.3% for the month, with wages and salaries also up 0.3% after a relatively weak August. Consumer spending rose a strong-but-expected 0.5% for the month, led by vehicle sales. The price index rose 0.2% M/M, putting the yearly gain at 1.2%, which is the strongest Y/Y figure in almost two years and edges 2 tenths closer to the Fed’s desired 2% rate. However, the core rate (ex food and energy) was only up 0.1% for the month and failed to move the yearly rate, which remains at 1.7%.
The Federal Open Market Committee (FOMC) meeting announcement on Wednesday upheld previous statements and language, providing little new insight into the likelihood of a December rate hike. The Committee believes the labor market and economy are continuing to strengthen, as is inflation, but most members want to see increased price pressure before increasing the federal funds rate.
Tues November 8 — Presidential Election Day
Fri November 11 — Veterans Day (banks closed, markets open)