US non farm payrolls rose by 80,000 in October (104,000 more jobs in the private sector and a loss of 24 000 government jobs). This is a sizable figure even though it is a bit lower than expected (we had forecast a 100,000 increase versus a consensus of +95k). Employment growth remains quite weak in absolute terms but we prefer to underline its stability over the recent months, a welcome and remarkable outcome given the financial stress, the elevated uncertainty and the confidence hit. This is encouraging news as it helps assuage double-dip fears. The actual pace of US GDP growth is far from satisfactory but we are inclined to see the glass as halffull rather than half-empty. The US economy is floating as evidenced by ISM surveys just above the 50-threshold since June-July but at least it is growing moderately. Low jobs growth is better than nothing.

Good surprises came from the clear upward revisions of net job gains in August (from +57 to +104k) and September (from +103 to + 158k). Moreover, for once, the official BLS figure was not very far from the ADP forecast (with a private payroll rise of 110,000). Interestingly, the October ISM ‘employment’ sub-components suggest a more positive figure, closer to 200,000.

Besides and, above all, the unemployment rate registered a small genuine decline from 9.1% to 9%, the first one after three unchanged readings. By genuine we mean a decline due to a stronger increase of household employment than labour force.

Among other positive results, we will note the strong rise in weekly hours worked in the manufacturing sector and the continuing small gains in temporary help services, both valuable leading indicators. We also welcome the significant decline in the average duration of unemployment and the various alternative measures of labour underutilization. Lastly, average hourly earnings registered a 0.2% monthly rise, translating into a rise of 1.8% on a year-overyear basis, a result which is not too bad considering the elevated unemployment rate.