October was another month of modest employment growth as measured by nonfarm payrolls. The Bureau of Labor Statistics reported that 80,000 jobs were created. This was at the low end of expectations and about 1/3 of what could be considered normal for this point in the cycle. The unemployment rate did drop from 9.1% in September to 9.0%. The average work week was flat at 34.3 hours and hourly earnings grow by 0.2%. Nonfarm business sector labor productivity increased at a 3.1% annual rate during the third quarter of 2011.
The Purchasing Manager's Index dropped to 50.8 in October. This is down from 51.6 in September and 56.9 a year ago. Anything above 50 indicates expansion in the manufacturing sector. Thus, it appears that manufacturing is still growing, but barely. New orders for manufactured durable goods in September declined by 0.6% but durable goods orders are up 6.3% from year earlier levels.
Construction spending in September rose, as expected, by 0.2%. This was down 1.3% from year earlier levels. This is modestly above expectations.
Not surprisingly, it's more of the same. Expect the modest level of growth to continue while the consumer sector continues deleveraging. This will take a while and will involve unpleasant things such as consumers continuing to use more of their incomes to repay previously accumulated debt and debt repudiation thru methods such as bankruptcy, foreclosure and mailing in the keys. How deleveraging plays out in the government sector remains to be seen. As bad as that sounds, it's a great deal better this time around than during the last great deleveraging some 80 years ago. At least the U. S. and Arizona are growing.
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