US non-farm payrolls rise less than expected, but details stronger

The American economy created slightly fewer jobs than expected in October, but upwards revisions to the data for the prior two months offset the miss, while the rate of growth in earnings accelerated.

Non-farm payrolls increased by 161,000 during the reference month, according to the Bureau of Labor Statistics.

Economists had been expecting a reading of 173,000.

However, the previous month´s gains were revised higher from a preliminary estimate of 156,000 to 191,000.

More jobs than previously thought were also created in August, with an initial estimate of 167,000 being revised up to 176,000.

In parallel, the unemployment rate edged lower from 5.0% in September to 4.9% in October, as expected, alonsgide a one tenth of a percentage point drop in the labour force participation rate to 62.8%.

To take note of, Hurricane Matthew did affect parts of the country's eastern seaboard during the reference week, impacting both the establishment and household surveys.

Significantly, average hourly earnings accelerated from a year-on-year pace of 2.6% in the month before to 2.8%.

Job growth among goods producing industries slipped from 14,000 in September to zero in October, while in services hiring fell off from 174,000 to 142,000.

Public sector employment on the other hand picked-up 3,000 to 19,000.

The length of the average workweek was unchanged at 34.4 hours (consensus: 34.4).

Following an initial spike higher to 1.82%, as of 1255 GMT the yield on the benchmark 10-year US Treasury note was lower by one basis point to 1.80%.

"The October wage gain was boosted by a favorable calendar effect - the month had only 20 working days, one fewer than usual, and short months tend to report stronger AHE - which will unwind in November.

"But the trend in wage growth is rising, and we expect further gains next year as the drag from low headline and core inflation fades and people seek bigger nominal increases, in order to maintain real wage growth. With the labor market very tight, employers will struggle to resist," said Ian Shepherdson, chief economist at Pantheon Macroeconomics.

"A solid employment report for October further clears the path for a December Fed rate hike. News of another decent rise in non-farm payrolls and an uptick in pay growth comes hard on the heels of business surveys showing the US economy having gained further growth momentum in October," chipped in Chris Williamson at IHS Markit.