The most recent Non-Farm Payroll (NFP) report paints a mixed but confusing picture of the U.S. labor market. Dramatic changes to old estimates have raised eyebrows and alarm bells among economists and pundits. A surprise miss, like the last eight jimmied NFP numbers, which were all revised down, suggests further weakening in employment growth. Substantially, the May NFP number was revised down from an original estimate of 139k jobs added to only 19k. Likewise, the June figure experienced a hefty revision, falling from 147,000 to an even more alarming negative 13,000.
Today, the unemployment rate is 4.4%. This rate is much lower than Canada’s 7% unemployment rate and that of the eurozone at 6.3%. These statistics paint a much-needed picture of the unpredictable, sketchy labor market landscape that is emerging across North America and Europe. Even with these revisions, several sectors continued strong job growth. Construction job growth increased, with the largest one-month surge since February. So far, expectations have exceeded even their wildest expectations, with over 50,000 new positions expected to be produced.
The leisure and hospitality sector boomed with double plus sign job growth of 90,000 jobs. This resolve made for a bright spot amid a sea of mixed signals in the economy. The August NFP was revised downward by 4,000, from the original tally of 22,000. This amendment significantly complicates the U.S. economic outlook.
For the month of October, the preliminary NFP number came in at 119,000 jobs created—more than what analysts were expecting. That still creates a little bit of uncertainty about the job market’s trajectory. Analysts are now raising alarms about how sustainable such a growth trend really is, particularly in light of the past few sets of revisions.
With all of this in mind, the Federal Reserve’s next meeting in December will certainly be affected by these positive developments. Policymakers seem ready to hit the pause button on interest-rate hikes. They would like to see more convincing data from October’s labor stats before pulling the trigger on anything. This absence of far-reaching data presents concerns as to how the Fed will react with the changing conditions in the labor market.