SOURCE: BMO Harris Bank

November 08, 2013 12:41 ET

BMO Economics: U.S. Job Numbers in October Knock Out Expectations

CHICAGO, IL--(Marketwired - Nov 8, 2013) - The latest U.S. employment numbers indicate some underlying strength in the economy, according to BMO Economics, with non-farm payrolls rising 204,000 in October. Any material impact from the U.S. government shutdown was sparse, as businesses boosted hiring and far surpassed the consensus estimate of 120,000.

"This is a noteworthy increase, particularly given that a number of private sector companies were laying off workers during the month as a result of the government shutdown," said Michael Gregory, Deputy Chief Economist and Head of U.S. Economics, BMO Capital Markets.

Gains were seen across the board, with the private sector hiring 212,000 more workers. All industries except wholesale trade and government increased their workforce. The public sector experienced a slight loss of 8,000 workers.

"The household survey was skewed by the high number of furloughed government employees, leading to a 735,000 fall in measured employment. For the most part, we can expect the decline to be reversed next month," said Mr. Gregory. "The unemployment rate rose to 7.3 percent and the employment rate dropped slightly to 58.3 percent, but that too was a product of the shutdown and should reverse course in November."

The index measuring weekly work hours rose 0.2 percent month over month, which puts it at 1.0 percent annualized above the third quarter average. BMO Economics is currently forecasting Q4 GDP growth of 1.6 percent, which factors in some productivity gains.

"The government furlough could knock half a percentage point off growth in the fourth quarter, but the subsequent rebound should mean a rise of three percent in the first quarter of 2014," added Mr. Gregory.

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