New labor report adds to optimism on economy

INDICATOR: October Jobs Report, NonManufacturing Activity and September Trade Deficit KEY DATA: Payrolls: +261,000; Revisions: +90,000 (+51,000 in September); Unemployment Rate: 4.1 percent (down 0.1 percentage point)/ ISM (NonManufacturing): +0.3 percentage point/ Trade Deficit: $0.7 billion wider

IN A NUTSHELL: “When you smooth out the weather-induced swings in the data, it is clear the labor market is strong and the economy is solid.”

WHAT IT MEANS: We all assumed that the weak September jobs report was the result of weather issues and that turned out to be indeed the case. The economy added a lot of workers in October, largely making up for the now modest September rise in payrolls. The initially reported September decline was revised to show an increase, so the seven-year run of job increases remains intact. The economy has averaged 162,000 new positions for the past three months and that is right on target, or at least my target. What we saw in October was a reversal of some of the weird numbers that were posted in September. For example, restaurants rehired most of the 98,000 workers they supposedly let go. That makes up much of the swing in the jobs numbers. The oddities in the data make it a waste of time to point out the industry strengths and weakness. I will wait until next month for that.

The unemployment rate declined to 4.1 percent rate, the lowest in nearly 17 years. But again, the data have to be