So where is the good news in the employment numbers?

Yes, employment fell even thought the market expected better numbers and other indicators of the economy are suggesting a recovery. Employment is lagging indicator but the market was expected better.

What is very disappointing is that labor force participation has declined from 65.4 to 64.6. 1.3 million have left the labor force since July. This may be the reason for why the unemployment is only 10%. Workers are leaving the labor market. They did not disappear and they are not dead. They just do not have any opportunities. This will weigh on the labor markets just like inventory. If the economy starts to again, these workers will reenter the labor force which will keep the unemployment rate from falling. What is also discouraging about this number is the participation rate for young people. There are no jobs for new entrants to the labor force.

There also is no good news out of the EU. Their unemployment rate has increased to 10%. What is most disturbing about their numbers is the dispersion in the unemployment rate. The lowest is the Netherlands which has a 3.9% while Spain has a rate of 19.4%. Unfortunately, there are no monetary policies that can help with this adjustment because it is "one size fits all" through the ECB. Depreciation of the exchange rate is not a tool that is available to help on the employment front.