On the October Jobs Report
October payrolls looked like a big miss, but with large upward revisions to September and August, they were actually a beat. Zero-growth in average hourly wages was an artifact of large re-hirings in Florida and Texas in the low-wage leisure sector, which brought the average down (just as lay-offs had created an illusory jump in September’s average). Massive fluctuations in the reported size of the labor force cast doubt on the downtick in the unemployment rate to new cycle lows. The Fed knows this is all noise, and nothing here will deter Yellen from a farewell rate hike in December.