NEW YORK (Reuters) - Nonfarm employment increased by 146,000 jobs last month, the Labor Department said on Friday, defying expectations of a sharp pull back related to superstorm Sandy.
However, job gains for both September and October were revised to show 49,000 fewer jobs created in those months than earlier reported.
The jobless rate fell to 7.7 percent last month, the lowest since December 2008. But the drop was because people gave up the search for work, which does not bode well for the economy
U.S. nonfarm payrolls graphic: http://link.reuters.com/ram54t
DAN HECKMAN, SENIOR FIXED INCOME STRATEGIST, U.S. BANK WEALTH MANAGEMENT, MINNEAPOLIS
"It would be our view point that this report is conflicting with a number of data. We haven't gotten a full impact of hurricane Sandy. We have an improving housing market, but this report shows construction jobs falling by 20,000. This is a milkshake of a lot of data points which don't make sense.
"All in all, it's better-than-what we had hoped. The market didn't expect a pickup in retail jobs. But we have to see how many of these jobs will go away after the holiday season.
"What are we are going back to focus on the 'fiscal cliff.' We are going also to focus on Europe with the drop in the German industrial output. It might be going into a recession. That's worrisome since that's Europe's largest economy."
JOHN KILDUFF, PARTNER AT AGAIN CAPITAL LLC IN NEW YORK
"The employment report indicates growing strength in the economy, despite the downward job creation revisions also contained in the report.
"Recent data have been mostly positive, as well, and should feed into increased consumer confidence, all of which should provide some stability to crude oil prices.
"The energy complex has been flagging, of late, so the demand that translates from increasing employment will be supportive of prices."
MICHAEL KASTNER, PARTNER, HALYARD ASSET MANAGEMENT, WHITE PLAINS, NEW YORK
"I'm kind of surprised. It's hard to figure out with what's going on with Sandy. The market was looking for something very different. Overall it's good to see. The payroll number is very encouraging. The bond players are not buying it though because the long end would have sold off more."
RYAN SWEET, SENIOR ECONOMIST, MOODY'S ANALYTICS, WEST CHESTER, PENNSYLVANIA
"Claims are very choppy from the hurricane distortions working through the system. The effect from the storm does seem to be temporary. We are not going to get clean readings on claims for several more weeks. We also have the typical year-end holiday distortions.
"Businesses are nervous about the fiscal cliff but they are not in a panic. They are in a holding pattern. They are not hiring or firing. This is actually a reason for optimism. If we make it past the fiscal cliff, hiring might pick up."
JACOB OUBINA, SENIOR U.S. ECONOMIST, RBC CAPITAL MARKETS, NEW YORK
"The big takeaway is that Sandy did not have the negative effect that people thought it would have. We are left with a number that is around the average of the year and so this not dramatically better than feared.
"It is also not a breakout of the trend. The labor market is not getting worse, but is also not getting much better as it is unchanged relative to the recent trend. This should have no impact on Fed policy and the central bank should remain on cruise control and continue with the QE program into the new year."
DAVID SLOAN, ECONOMIST, 4CAST LTD, NEW YORK
"The surprise was that hurricane Sandy didn't have much of an impact. Otherwise really it is more of the same. The payrolls are pretty much in line with trend and the revisions were significant in government but fairly neutral in the private sector, and the private sector payrolls are maintaining the pre-hurricane trend. The picture remains as it was before hurricane Sandy."
JEREMY LAWSON SENIOR US ECONOMIST BNP PARIBAS, NEW YORK
"Private payrolls did decline a little bit in the month so maybe this is a sign that Sandy didn't have much of an impact on employment.
It doesn't change the outlook for the Fed...I still would be expecting them to announce next week that they'll be extending their purchases to next year.
"I wouldn't go far necessarily, the big issue over the next few months is what happens with the fiscal cliff. Our view is that plays out in a benign way."
KATHY LIEN, MANAGING DIRECTOR, BK ASSET MANAGEMENT, NEW YORK
"Overall, this is a pretty good number, even though we had a downward revision to the previous month. Most important, the unemployment level dropped to its lowest level since December 2008. Sandy didn't have as much of an impact as many feared.
"The real question though is whether this changes the Fed's attitude toward more stimulus. It doesn't remove the need for stimulus but might convince the Fed to opt for a smaller program. The dollar is rallying right now, and that should last, particularly against the yen."
KATHY JONES, FIXED-INCOME STRATEGIST, CHARLES SCHWAB, NEW YORK
The data is even more muddled than we thought because the BLS is telling us that superstorm Sandy did not impact the numbers. The downward revision to the previous month's payroll growth almost offsets the higher than expected number this month. And the decline in the unemployment rate, which is a good sign, may be tied to a decline in the labor force participation rate. You have good news here and bad news so I would not call it a particularly strong report."
PETER HOOPER, GLOBAL CHIEF ECONOMIST, DEUTSCHE BANK, NEW YORK
"The headline payroll number suggests hurricane Sandy had less effect than might have been feared. The unemployment rate coming down is good news on the surface, but it reflects a decline in labor force participation. The key is that the employment to population ratio has not really come down in this recovery. Some of this reflects discouraged workers and part of it is that baby boomers are starting to reach retirement age. Other measures showing people working part-time when they would like to work full-time are quite elevated. The payroll numbers look okay, about in line with numbers we've had for the last year, but it's still a market that is soft underneath."
JOSEPH TREVISANI, CHIEF MARKET STRATEGIST, WORLDWIDE MARKETS, WOODCLIFF LAKE, NEW JERSEY
"Despite the projected effects of Hurricane Sandy job production in November was on a par with the prior three months, that is a good sign for December and the first quarter."
RUSSELL PRICE, SENIOR ECONOMIST, AMERIPRISE FINANCIAL, TROY, MICHIGAN
"Initial claims are settling back into their pre-Sandy levels. So the negative impact from the spike that we experienced after hurricane Sandy is abating.
"It's a little bit too early (to forecast December) but it does give us a positive trend that claims have now fallen for four straight weeks and it's a positive indicator that the labor market is remaining fairly solid although certainly not robust by any means."
STOCKS: U.S. stock index futures turn positive
BONDS: U.S. bond prices down, 30-year bonds fall a point in price
FOREX: The dollar gains versus euro
(Americas Economics and Markets Desk; +1-646 223-6300)