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NFP Recap: US jobs miss but revisions redeem

As we suspected prior to Friday morning’s US jobs release, the highly optimistic consensus expectation of over 300,000 jobs added in October made it easier to disappoint than would normally be the case. As it turns out, “only” 261,000 jobs were created in the month following September’s weather-related job disruptions, falling well below consensus estimates of around 310,000 and slightly below our target range of 270,000-300,000. Adding to the forecast disappointment, wage growth also fell short, with average hourly earnings remaining flat against expectations for 0.2% growth.

On the plus side, however, the unemployment rate fell to 4.1% against a prior consensus forecast of 4.2%. Additionally, September’s dismal -33,000 job loss initially reported last month was revised up to an 18,000 gain in jobs, and August was also revised up substantially, from 169,000 to 208,000. Together, these revisions added 90,000 more jobs than previously reported for August and September. With the revisions, the initial negative impact of the October miss was quickly ameliorated.

The knee-jerk reaction to Friday’s October headline and wage growth disappointments included a sharp, but brief, drop for the US dollar. As noted, however, when the more constructive aspects of the jobs report were digested, the dollar pared those losses and entered into positive territory on Friday morning. Overall, the jobs data showed continued strength in the US employment landscape. Coupled with high expectations for rising interest rates in December and into 2018 under the helm of newly-nominated Fed Chair Jerome Powell, as well as anticipation of impending tax and other fiscal reform, continued US job strength is likely to help support the dollar further in its recent recovery.

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