Total non-farm payrolls were up 151K in October, much better than the consensus estimate of +60K. Private payrolls grew 159K compared to the consensus estimate of +80K. In addition, there were positive revisions to the September and October numbers. Total non-farm payrolls only declined 42K in those two months compared to the prior estimates of -152K. Adding together the positive revisions and the better-than-expected number in October, payrolls were about 200K better than expectations for the past three months. This is obviously a very good sign for the economy.
The unemployment rate, which is calculated using a different survey, remained steady at 9.6%. Interestingly, the civilian labor force declined by 254K. This suggests that the unemployment rate may go even higher as frustrated workers re-enter the labor force and are once again included as "unemployed." The underemployment rate (or U6) declined slightly to 17.0% from 17.1%.
In my opinion, it will take several months of positive job additions in the 150K+ range before the Fed feels comfortable that the employment situation is getting better. There is still a very high level of unemployed people as well as people who remain out of the labor force because they are frustrated. Therefore, we would expect QE2 to go ahead as planned. However, people are already beginning to speculate that this may be the beginning of the end for the series of large bond purchases by the Fed. So QE3 may be out of the question for now.