The tiny 12k payroll employment gain in October was heavily distorted by the impact of hurricanes, a large strike in the manufacturing sector, and an unusually low initial survey response rate, RBC’ economists note.
Fed to cut rates by 25 basis points next week
“The unemployment rate was likely a 'cleaner' read on labour markets in October, and it was unchanged from September and still slightly below levels in the summer.”
“Underlying details are still consistent with a softening in labour markets - permanent layoffs rose and downward revisions knocked 112k off payroll employment growth in August and September - but still at a very gradual pace that is consistent with a 'normalization' from unusually low unemployment levels rather than a faltering.”
“Interest rates are still likely higher than they need to be for inflation to return fully back to the Fed’s 2% inflation target, and today's data helps to reinforce our expectation that the Fed will cut rates by 25 basis points next week.”
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