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Here we go again? Maybe. Another economic release, another opportunity to rethink yesterday's conventional wisdom.

Friday morning's news that employment growth was a lot more bubbly last month than economists expected. The consensus forecast called for a rise in nonfarm payrolls of just 80,000 for October, according to TheStreet.com. That would have been one of the smallest gains in recent years.

As it turned out, the gloom was misplaced: payrolls rose by 166,000 last month, which as our chart below shows, is the highest pace since May. Meanwhile, the unemployment rate remained unchanged at 4.7%. Given Thursday's hefty drop in the stock market, Friday's news at least offers a temporary reprieve from an otherwise gloomy week of news.

The rebound in job growth in October marks a striking reversal of the sluggish rate of expansion in previous months. From June through September, monthly employment growth was under 100,000, giving us the longest stretch of subpar increases in recent memory.

What drove October's rebound? The bulk of the employment gains were generated by the services industry, which posted a healthy rise of 190,000 new jobs last month. That's a significant trend if only because services are now the single largest source of employment in the country. There were other bright spots as well. The professional and business services industries were in second place after services with a rise of 65,000 new jobs. Meanwhile, the net losses were confined to the construction, manufacturing and retail trade. The latter three are cyclically sensitive and so no one should take comfort from ongoing job losses in those groups.

The employment weakness in goods producing industries was corroborated in Thursday's update of the October ISM manufacturing index, which fell to its lowest level since March. If nothing else, it's clear that the real estate correction continues to bring pain to the cyclical corners of the economy. Debating if that pain will spill over to services, or not, remains the great unknown.

No matter, as the payroll report seems set to define the tone for this Friday. As we wrote this on Friday morning, stock futures were up a few minutes before the opening of the stock market in New York.

But before we breathe a collective sigh of relief, it's important to remember that the economy's still digesting a fair amount of change these days. The potential for surprises, negative and positive, are higher than usual as a result. One example is the weak earnings from the oil patch. Who could have imagined that what is perhaps the greatest energy bull market would be bad news for the Exxons and Chevrons? Recognizing that unintended consequences may bring more surprises inspires the question: What don't we know? Perhaps more than is obvious.

Yes, Friday's employment numbers are encouraging. However, it's just one number and it's subject to revision. And one month a trend does not make. The general trend for many months for employment has been down. It'll take more than one month to provide convincing evidence that the slippage is no more.

Source: The October Employment Surprise: Is the Slippage Over?