Jobs Report +128K, Better than Expected, Plus FIT, XOM & More

Friday, November 1, 2019

The monthly Employment Report from the U.S. Bureau of Labor Statistics (BLS) has come out for October this Friday morning, with results much better than expected: 128K new jobs were created for the month, better than the sub-100K figures analysts were expecting. The Unemployment Rate rose 10 basis points to 3.6% from 50-year lows reported last month.

Although 128K is not a gargantuan monthly jobs total (131K on the private-sector side; the government lost 3000, largely on the laying off of 2020 census workers), there were significant upward revisions to the previous two months: September gained 44K on its revision to 180K, and August went up 51K to 219K — the first time since April we were over 200K on new monthly jobs totals. This puts the 3-month moving average at 176K — much better than anticipated, and actually an improvement over 3-month totals earlier in the year.

Does this mean jobs growth is bouncing off a bottom? If it is, it’s hard to see where it might be sustained: Food/Drinking Establishments led the way last month with 48K new hires, followed by Professional/Business Services 22K, Social Assistance at 20K, Financial Activities at 16K and Healthcare 15K. What it does mean is that our employment situation is stronger than we had been expecting, with more than enough new jobs being created to cover for large numbers of retirees.

Consider also that the United Auto Workers (UAW) strike at General Motors GM cost the month 42K jobs, on the way to a loss of 36K Manufacturing jobs last month. Average Hourly Earnings rose a little less than expected, up 6 cents to an average of $28.18 per hour, +0.2% and +3% year over year. This is illustrative of slow wage growth continuing through this years’ long bullish labor market. Labor Force Participation ticked up to 63.3%, while the U-6 (aka “real unemployment”) moved up 10 basis points to 7.0%.

Also of interest to investors this morning, ISM Manufacturing data is expected to be released after the opening bell. Will results be similarly stimulative to market indexes today as the better-than-expected jobs numbers did? Currently, analysts expect a 49.0% read on Manufacturing — still sub-50%, but better than September’s reported 47.8%.

Fitbit FIT shares had been halted from early-morning trading on news that has subsequently released: it has agreed to be bought out by Google parent Alphabet GOOGL for $2.1 billion, or $7.35 per share. Shares had been locked up at $6.16 per share, which itself was ramped up on rumors of the Google news earlier in the week. The announcement mentioned the deal is expected to close sometime in 2020.

Q3 Earnings: Oil Companies Slip on Revs

Also ahead of the opening bell are new Q3 earnings results from lots of companies, including two Integrated Oil & Gas ’supermajors” — ExxonMobil XOM and Chevron CVX. Both companies outperformed on their bottom lines — 68 cents per share versus 64 cents expected, $1.59 per share versus $1.47 expected, respectively. Yet, on well-publicized lower oil prices, both companies missed on revenue estimates: Exxon -4.16% to $65.05 billion, Chevron -7.53% to $36.12 billion.

Exxon stock, which had been down marginally year to date, is up slightly; Chevron, only having grown around 7% on the year (compared to +21.2% on the S&P 500) is down 0.64% in early trading. For more on XOM’s earnings, click here. For more on CVX’s earnings, click here.

Mark Vickery

Senior Editor

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