The September Employment Report should be bullish for both stock and Treasury prices but bearish for the dollar -- as its key elements should keep the Fed on hold at least through November. In particular, the Report underscores Yellen's rationale for not tightening in September -- the labor market has enough capacity to accommodate decent job growth without igniting inflation.
1. The +156k m/m increase in Total Payrolls, with net downward revisions in July and August, is decent but not kept them under the +181k m/m January-August average.
2. The uptick in the Unemployment Rate to 5.0% (4.96% unrounded) from 4.9% in August (4.92% unrounded) occurred even with a large 354k increase in Civilian Employment.
a. This is because the Labor Force jumped 444k as Labor Force Participation (percentage of working age population that is working or unemployed but looking for work) rose. The higher Participation Rate is a sign that people are becoming more confident about the labor market. If it continues, it would give the economy more room to grow without pushing up inflation.
b. The broader measure of labor market slack -- U-6 -- was unchanged at 9.7%.
3. The 0.2% m/m increase (0.23% unrounded) in Average Hourly Earnings was modest, after a 0.1% August increase and in light of calendar considerations that should have biased up the September print.
a. The y/y rebounded to 2.6%, but this remains within this year's range. And, it should fall back to 2.4% by November.
No comments:
Post a Comment