Instant view: Payrolls surge in October

NEW YORK (BestGrowthStock) – U.S. employment increased more than expected last month as private companies hired workers at the fastest pace since April, offering more signs of an up-tick in a sluggish economy.

COMMENTS:

SUBODH KUMAR, CHIEF INVESTMENT STRATEGIST, SUBODH KUMAR & ASSOCIATES, TORONTO:

“It’s good news, that there is growth (in the labor market), it will probably allow the markets to consolidate a little bit here.

“Both bond and stock markets are going to be looking closely to what is happening to the U.S. dollar.

“The assumption has been that if the dollar weakens that is good for equities, and with this kind of news the dollar should

stabilize if not move up a bit, so that could keep equity markets a little bit quieter.

“Any sign of somewhat stronger growth would probably move up the bond yield so I could see the bond market weakening a little bit.”

LINDSEY PIEGZA, ECONOMIST, FTN FINANCIAL, NEW YORK

“It really was a much better-than-expected report and not any of the shenanigans that we’ve seen before about the headline giving a rosier picture than the private payrolls reveal.

“We’re still not at the pace that we need to be; we’re not at that pace that corrects not only demographic change but begins to make up for jobs that we lost, but it is a step in the right direction.

“We need to, at this point, remove some of the overhang of uncertainty that’s been plaguing the private sector.

“We did see some growth in education and a very small decline in government and this is surprising because not only is this a reversal from what we’d seen the previous month but we are facing a $200 billion shortfall in state budgets. Wall Street is estimating that up to a million pink slips would have to be handed out to close that shortfall.

“The main point here is that we did see some strong growth in the private sector. We would have wanted to see this result in a downward move in the unemployment rate, so this is certainly not good news in terms of building confidence–it’s unlikely that this month’s report will result in a significant increase in confidence.

“The Fed, like Main Street, watches the unemployment rate and they want to make sure there is a clear, discernible downward trend in the unemployment rate. This report, while positive, does not suggest that. The Fed is certainly not going to be responsible for pulling the rug out from under this recovery.”

JEFFREY FRIEDMAN, SENIOR MARKET STRATEGIST AT LIND-WALDOCK IN CHICAGO:

“We have to be above 100,000 month after month to make some real headway, but this was a shocker.

“Good news is good news. The commodity markets and the stock markets all got everything they wanted this week, which is incredible. They didn’t get one curve ball, it was all right down the plate exactly what they were looking for and if they can’t hit it out of the park on these numbers, they’re not going to hit.”

JOHN CANALLY, INVESTMENT STRATEGIST AND ECONOMIST, LPL FINANCIAL, BOSTON:

“Upward revisions to prior months are big, so I think it’s a good start as the Fed starts quantitative easing, Even at 159,000 on the private sector, it’s still probably not enough to get the Fed convinced the unemployment rate is going to go down or inflation is going to go up. so the Fed is going to continue to do quantitative easing. But this is certainly a good kick-start.

“The (stock) market has had some good news here lately. The other day you saw some data that suggested re-acceleration in the economy, and this also suggests some re-acceleration, so I think it might mean the soft spot is over, and the stock market could pierce those 2010 highs and stay above them.

CARY LEAHEY, ECONOMIST, DECISION ECONOMICS, NEW YORK:

“(Fed Chairman Ben) Bernanke has to keep doing what he’s doing because even with what appears to be better-than-expected private payroll gains, the unemployment rate went up.

“It was a good report, but the bond market took it well. The payroll gains look pretty well distributed, with only manufacturing and financial services showing declines. Weekly hours and average hourly earnings rose.

“The only negative was the decline in household employment. The bond market is holding in quite well, considering that the last four months now each show private payroll gains of more than 100,000. The numbers for the last four months look much much better. The so-called summer slowdown is not in this report at all. It looks like the economy picked up since June.”

NIGEL GAULT, CHIEF U.S. ECONOMIST, IHS GLOBAL INSIGHT, LEXINGTON, MASSACHUSETTS:

“The numbers now show four months in a row of private employment of above 100,000. Those are solid increases, as well as noting the work week lengthened, so hours were up as well employment.

“It’s a lot stronger than people were anticipating.

“So it’s still within the realm of a moderate recovery. It’s both better than people had been looking for and it’s another nail in the coffin of a double dip.”

FABIAN ELIASSON, VICE PRESIDENT OF CURRENCY SALES, MIZUHO CORPORATE BANK, NEW YORK

“This was hugely surprising. It’s strong across the board. I don’t want to draw over-hasty conclusions, because I think it all depends on how sustainable these gains are. I want to see several months of these kind of numbers. But the dollar is strengthening nicely and we could see a little bit of a reversal from recent dollar selling heading into the weekend. What it means for the Fed’s QE program is less clear, because their commitment was pretty strong — I think they were even a little too aggressive. But overall, the data is a very pleasant surprise.”

SEAN INCREMONA, ECONOMIST, 4CAST LTD, NEW YORK

“It looks pretty good, we have strong private sector payrolls, earnings are better than expected at 0.2 revisions, and the work week is strong.

“The only thing that’s a little bit disappointing is the fact that the unemployment rate stayed steady, but overall it’s a pretty good batch of numbers.

“We still have the unemployment rate steady so this isn’t going to affect the Fed thinking too much at this point.”

MARKET REACTION: STOCKS: U.S. stock index futures rallied sharply. BONDS: U.S. Treasury debt prices slumped. DOLLAR: U.S. dollar surged against the euro and yen.

Instant view: Payrolls surge in October