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US Unemployment Rate Posted A Decent Decline in October

Posted Friday, November 6, 2020 by
Skerdian Meta • 1 min read

The trend looks really good

The unemployment rate surged in the US, even more so than in Europe during the lock-downs. But employment has been increasing since then and the unemployment rate has been declining. In September the rate fell to 7.9% in September and was expected to cool off further to 7.7%, but fell to 6.9% instead.

Now unemployment is getting back to normal in the US, faster than in Europe. All these positive data from the US should turn the USD really bullish, but markets are on limbo due to the elections in the US.

US October 2020 Non-Farm Employment Report:

October non-farm payrolls 638K vs 580K expected
September payrolls were 661K
Unemployment rate 6.9% vs 7.6% expected
Prior unemployment rate 7.9%
Participation rate 61.7% vs 61.5% expected
Prior participation rate 61.4%

Underemployment rate 12.1% vs 12.8% prior
Average hourly earnings +0.2% m/m vs +0.1% expected
Average hourly earnings +4.5% y/y vs +4.5% expected
Average weekly hours 34.8 vs 34.7 expected
Two month net revision +15K
Change in private payrolls +906K vs +680K expected
Change in manufacturing payrolls +38K vs +55K expected
Government jobs cut 268K from payrolls (half were census layoffs)
3.56m unemployed for 27 weeks or more (long term threshold) vs 2.41m prior

Unemployment falling by a full point with a 0.3 pp rise in participation is wildly impressive. Everything about this report is impressive. You would expect a stumble at some point but it never comes. The proxies for this report were weak but there’s nothing like that in the data.

No amount of new cases seems to slow down the recovery as companies and people learn to work around the pandemic. The FX market has hardly moved on the data but that’s not a big surprise given the backdrop around the election.

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