RESEARCH REPORT

US OCTOBER EMPLOYMENT REPORT: POSITIVE SURPRISE

A Cushman & Wakefield Research Publication

NOVEMBER 2, 2012

The October employment report released this morning contained several positive surprises. The total increase in payroll employment was 171,000 jobs, stronger than the consensus forecast of roughly 125,000. In addition, the level of employment in both August and September was revised up substantially. Employment growth in August, which was first reported two months ago as +96,000 is now estimated at +192,000 jobs. And September employment is now estimated at +148,000 jobs, not the +114,000 reported a month ago. So the economy had roughly 85,000 more people working last month than previously estimated. The separate household survey showed that the unemployment rate increased slightly to 7.9% as the number of people unemployed jumped by nearly 200,000. The details of the report were mixed. The growth was broad based-60.7% of all industries surveyed added jobs during the month, the highest percentage since May. However, the length of the average workweek was unchanged and average hourly earnings fell, so take home pay, on average was down slightly in the month. The U-6 unemployment rate which includes people who are working part time because they cannot find full-time work and those who are marginally attached to the labor force fell slightly to 14.6% from 14.7% in September, still very elevated. Employment in the main office-using sectors (financial, professional and business services and information) increased by 56,000 jobs (roughly one-third of all the jobs added and well above its share of total employment [21%]). Retail employment increased a solid 36,000 jobs, the largest gain since April 2011. In addition, employment in the food services industry jumped 23,000, the fourth consecutive healthy increase. As a result, retail-related employment was up 59,000 jobs in the month and more than 140,000 jobs from a year ago. Employment in industrial-related sectors also increased 16,000 jobs, led by growth in manufacturing (+13,000).
Payroll Employment Change
(Change From Previous Month, Thousands of Persons)

300 250
246

275 251 220 220 202 223

259

200 150

181

192

157

121

110

96

112

100 50 0

120

143

84

85

54

68

87

Monthly Change

6-Month Moving Average

Source: U.S. Department of Labor, Bureau of Labor Statistics

45

148

171

RESEARCH REPORT
US OCTOBER EMPLOYMENT REPORT: POSITIVE SURPRISE
A Cushman & Wakefield Research Publication

NOVEMBER 2, 2012

Although better than expected, and with positive revisions, the economy remains in low gear. For the last three months, employment has increased an average of 170,300 jobs per month, which is moderate in an economy that is still far below potential. For example, if the economy continues to add jobs at this pace we will not recover all the jobs lost in the recession for more than two more years (in December 2014). As one colleague has described it, the recovery feels like we are sitting in a car with a student driver as we go from the accelerator, to the brakes and back, spurting forward and jerking back. Uncertainty continues to dominate the economic landscape. The election next week will help set the political stage on which the big economic decisions that face the US will be made. But until decisions are made about tax and spending policy in the US businesses are unlikely to take the risk of increasing hiring. As a result, while the recent employment data has shown some improvement, it is unlikely that the economy will shift into a higher gear until there is more clarity about the tax and spending environment in the US and in Europe.

For further information, or answers to any questions please contact: Ken McCarthy Chief Economist Cushman & Wakefield, Inc. Ken.mccarthy@cushwake.com