“Come on, come on, big bucks, no whammies, no whammies!” Drumroll……
29,000. That’s the NFP headline for September, and it missed every estimate. Consensus wanted 95,000. Womp, womp.
The disappointment didn’t stop there. Revisions stole 29,000 from August’s scorching headline, which now shows a less-impressive (if still robust) 133,000-job gain. Womp, womp.
Insult to double injury: July’s headline, which initially showed a loss but was revised last month to show a gain, now shows a loss again. Womp, womp.
Incorporating the revisions, the three-month average for the NFP headline was basically unchanged in September from August at 51,000. Notably, that’s right on the estimated breakeven rate.
Taken together, September’s headline pace and the August/July revisions counted as a downside disappointment of comparable magnitude to the prior month’s surprise, only in the opposite direction.
Health care was the lone bright spot, but even there “bright” is a stretch: Hiring in the sector was just half the 12-month average.
Not surprisingly given the sluggish hiring pace, average hourly earnings growth undershot, rising just 0.1% MoM and 3% YoY. That latter pace ain’t gonna cut it in the context of 3.4% headline inflation.
On the household survey side, the jobless rate ticked up to 4.2%, but the unrounded comparison basically shows no change (4.175% for September versus 4.141% for August).
As the figure shows, the participation rate jumped to 61.8%, still low but the highest in four months.
The unemployment rate, then, is rising for the “right” reasons. And it’s anyway not rising by a lot. Note that the difference between the unrounded rates for the last two months is a mere 0.034%.
You don’t need a lot of complicated analysis here. This was a disappointment, but not a total disaster. As noted above, the three-month average for the NFP headline is right on the breakeven rate, which probably isn’t a coincidence. At the same time, the jump in participation easily “explains” the muted uptick in the UNR.
In light of dovish remarks this week from John Williams and Philip Jefferson, I reckon a hike at the October FOMC meeting is now off the table barring a huge core CPI overshoot on October 14.
There’s very little churn in the US employment environment. Is that a sign of stability or fragility. Feels like the latter to me.
Without healthy churn how is labor going to get its share of future AI earnings. Don’t want to kill the golden goose do we.
Yet another convincing argument for weekly dot plots! The Fed is making things too difficult for specs.
Meanwhile, there’s a piece from Goldman suggesting that even a large cohort of wealthy people are living month-to-month. Shouldn’t everyone simply drain their “excess” savings?
We’re supposed to sit in front of our screens high from the mushrooms and gummies we’ve bought online and use AI to manage our online bets while mindlessly following subliminal advertising telling us happiness is knowing our next amazon delivery is only hours away. What Bezos is selling is much stronger than chemicals. (I think I might have gotten up on the wrong side of the bed today.)
Someone is being extra cute with the numbers in this report, good lord. “Coincidence” is def a word for it.
I appreciate the sentiment (God knows I’m amenable to snark), but if you were going to goal-seek a 3MMA, 50,000 breakeven NFP pace, -10,000, +133,000 and +29,000 seems like a pretty circuitous way to go about it. I doubt Trump’s BLS is that clever. Like: “Well, +43,000, +59,000 and +53,000 is too obvious. They might get wise. Let’s do -10,000, +133,000 and +29,000 instead.” Trump’s never thought that hard about anything in his life.
Point is: By “…probably isn’t a coincidence,” I actually meant the opposite of a conspiracy in this case.
If only they were that smart, then maybe there’d be a chance to right the ship. Unfortunately we’re on the USS Insanity where the captain heads for any iceberg he can see.
Ahoy! White mirage ahead. Places where he angels live. Much like a rainbow, will disappear the closer we get. Full steam ahead.
Little soldier in the bourbon?