Market Wired (11/04/15)

Private sector employment increased by 182,000 jobs from September to October, according to Automatic Data Processing. Goods-producing employment rose by 24,000 jobs in October, representing the best month in this sector since January of this year. The construction industry added 35,000 jobs in October, roughly matching September’s gain. Meanwhile, manufacturing remained in negative territory, losing 2,000 jobs in October after shrinking by 17,000 in September. Service-providing employment rose by 158,000 jobs in October, down from a downwardly revised 182,000 in September.

“Job growth as measured by the ADP Research Institute is not slowing meaningfully in contrast with the recent slowdown in the government’s data,” says Mark Zandi, chief economist of Moody’s Analytics. “The economy is creating close to 200,000 jobs per month. Job gains are broad based with energy and manufacturing alone subtracting from the top line. Small businesses, in particular, are contributing to the labor market’s solid performance.”

Reuters (11/03/15) Lucia Mutikani

New orders for U.S. factory goods fell 1.0% in September, after a downwardly revised 2.1% drop in August, according to the U.S. Department of Commerce. Orders for automobiles and parts rose 1.5% in September, after falling 2.0% in August. Orders for nondefense capital goods excluding aircraft decreased 0.1% in September, instead of the 0.3% drop initially reported.

The factory orders report also showed a 0.4% decline in manufacturing inventories, which was bigger than the government had assumed for its third-quarter gross domestic product estimate published last week. The decline suggests the third-quarter GDP estimate could be lowered by at least one-tenth of a percentage point to a 1.4% annual pace, economists say.

MarketWatch (11/03/15) Jeffry Bartash

The labor market is tighter than it has been in the last 15 years, according to Stephen Williamson, vice president of the Federal Reserve Bank of St. Louis. Moreover, there is an unusually high number of people who are among the ranks of the long-term unemployed who “may be masking how tight the labor market is,” says Williamson. Approximately 2.1 Americans were classified as long-term unemployed in September, a sharp decrease from the 6.8 million recorded in early 2010.

This position underscores a prominent debate inside the central bank about the true health of the nation’s labor market. The Fed is more likely to increase interest rates soon if a majority of its leaders believe jobs are abundant and that most people who want a full-time job could find one. Numbers suggest, however, that many in the long-term unemployed demographic lack the necessary skills to get hired for the jobs available now, according to Williamson, who notes that some of these individuals “are unlikely to be hired under any condition,” and may soon drop out of the labor force completely. If half of the 2.1 million long-term unemployed were not counted as part of the labor force, U.S. unemployment would be 4.6%, instead of the official 5.1% rate, Williamson says.