Unemployment Passes 10% Threshold

The unemployment rate broke above the 10% barrier and jumped 0.4 percentage points to 10.2% in October. This is the highest rate of unemployment since 1983.

The consensus did not foresee the unemployment rate moving nearly as high and predicted a more modest 0.1 percentage points increase to 9.9%.

The knee-jerk thought to the rise in unemployment was that it had to be due to workers reentering the workforce. However, that was not the case. The labor force declined by 31,000 people as 259,000 workers left the workforce over the last month.

The jump in the unemployment rate was solely due to an increase in the unemployed. It was not from any statistical manipulations.

Payroll declines continued to moderate as only firms only shed 190,000 jobs in October.

While the decline in payrolls was more than the consensus expected (-175,000), it still shows a slight strengthening in the labor market compared to September (-219,000).

However, the decline in payrolls would have been much worse if companies didn't start hiring temporary workers. Temp jobs increased 33,700 in October and other employment service jobs increased by 2,300. Without the massive increase in temporary workers, the drop in payrolls would have increased from September.

All of the decline in payrolls was in the private sector as the government did not shed any of its workforce. This was surprising given the severe budget problems most states still face.

In the private sector, goods producing payrolls declined 129,000 jobs as the construction sector shed 62,000 jobs and the manufacturing sector lost 61,000 jobs.

The service-providing sector shed 61,000 jobs, but the news wasn't all bad. Professional and business service sector gained 18,000 jobs due to a huge jump in rehiring temporary workers. The education and health services industries increased their workforce by 45,000.

The average workweek held steady at 33.0 hours and hourly earnings increased 0.3%.