The US unemployment rate rose from 7.2% to 7.3% between September and October but would have declined but for the government shutdown, which resulted in both federal and private-sector employees being temporarily laid off and therefore included in the unemployment total.

Temporary layoffs rose from 1,087,000 in September, accounting for 0.70 percentage points of the 7.2% unemployment rate, to 1,535,000, equivalent to 0.99 pp, in October. This suggests that the jobless rate would have been 0.29 pp lower in the absence of the shutdown, or 7.0% rather than 7.3%.

The continued underlying improvement is revealed by the unemployment rate excluding temporary layoffs, which dropped another 0.25 pp to 6.3%, a five-year low – see chart.

The November employment report to be released early next month will be critical but the odds of a December Fed “taper” have shortened.