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Jobs Static Turning Bullish?

Memories of March came flooding back Friday, as the job market turned back on like a light switch after several months of anemic growth.

But just as solid employment gains in the spring proved to be unsustainable, so, some economists say, will the robust gains of October.

Nonfarm payrolls rose by 337,000 in March, well above consensus estimates for 175,000. Also encouraging, the months of August and September were revised up by a combined 113,000. Average hourly earnings increased 0.3%, in line with the estimates, but the unemployment rate inched up to 5.5% from 5.4%....

The financial markets didn't stop to reflect. Stocks rose and bonds tumbled, as traders increased the odds for a fifth rate hike in December. Investors were already fully prepared for a fourth rate hike next Wednesday.

The yield on the 10-year Treasury climbed to 4.19% from 4.07% on Thursday. The Dow was up 49 points at 10,364 and the Nasdaq was up 11 points at 2,035.

Anirvan Banerji, director of research at the Economic Cycle Research Institute, said he is surprised how much the markets have reacted to the employment report, given that it has been skewed by bad weather and is unlikely to continue at this pace going forward.

"This is not the first month of a string of 300,000-plus jobs," he said. "Manufacturing is still in a global slowdown and as long as that persists, we are not going to get back to the strong growth in GDP that we saw late last year and early this year."

Manufacturing employment fell by 5,000 in October, the second straight loss. The factory workweek declined a tenth of an hour, and total hours worked in manufacturing fell 0.3%. The average workweek overall held steady at 33.8 hours.

Banerji expects about 200,000 job gains per month to be created going forward, which would be an improvement from the sluggish job growth of June and July.

"That is not bad but it's not that great," he said. "When you have 3.5% to 4% GDP growth, a couple of hundred job gains is not that good. You'd expect to see 300,000 to 400,000, like the numbers we saw today, which were affected by a one-time anomaly."

Although a strong pick-up in economic growth "is not in the cards," Banerji said a sharp downturn in the economy isn't likely either. "The message is: don't worry, don't be happy," he said.