US September jobs report beats forecasts, August a shocker though
Newsflash: The US economy added more jobs than forecast in September, as America’s jobs market picked up after a summer lull.
September’s official employment report, delayed since the start of October by the US government shutdown, shows that nonfarm payroll employment rose by 119,000 in September.
That’s more than twice as many jobs as expected, thanks to gains in health care, food services and drinking places, and social assistance. Job losses occurred in transportation and warehousing and in federal government, though.
But there’s bad news too. The jobs reports from July and August have been revised down, to show that the US economy actually lost jobs in August (!).
The Bureau for Labor Statistics explains:
The change in total nonfarm payroll employment for July was revised down by 7,000, from +79,000 to +72,000, and the change for August was revised down by 26,000, from +22,000 to -4,000. With these revisions, employment in July and August combined is 33,000 lower than previously reported.
Key events
Wall Street rallies after jobs report and Nvidia results
Wall Street has jumped at the start of trading, as traders hail Nvidia’s strong results last night and today’s jobs report.
Tech stocks are rallying strongly, after Nvidia cooled fears of a bursting AI bubble by beating expectations last night.
The news that more jobs were added across America in September than expected has also bolstered confidence about the health of the US economy.
Reuters helpfully has the details:
The Dow Jones Industrial Average rose 428.7 points, or 0.93%, at the open to 46567.51. The S&P 500 rose 95.8 points, or 1.44%, at the open to 6737.93, while the Nasdaq Composite rose 492.8 points, or 2.18%, to 23057.001 at the opening bell.
Isaac Stell, investment manager at Wealth Club, is also confident the US Federal Reserve won’t deliver a pre-Christmas rate cut:
“US job growth blew past expectations in September painting a rosy pre-shutdown picture and delivering the largest jobs gain in 5 months.
Despite the data already being out of date, this will be the only major jobs release prior to the Fed’s end of year meeting. Given the Fed minutes showed hesitancy within the ranks when it comes to a final interest rate cut in 2025, the strength of this jobs report will likely ensure nothing changes.
So, the sleigh bells will not be ringing this December at the Fed. Instead of a perfectly wrapped rate cut, the US consumer is likely to be met with a lump of coal.”
Earnings growth slows
Average earnings growth slowed in September, today’s jobs report shows, in a blow to US workers.
Average hourly earnings for all employees on private nonfarm payrolls rose by 9 cents, or 0.2%, to $36.67 in September, down from 0.3% growth in August.
Over the past 12 months, average hourly earnings have increased by 3.8%.
Seema Shah, chief global strategist at Principal Asset Management, says today’s US jobs report is “unlikely to tip the balance to a December cut”.
Shah explains:
“Despite the fact that today’s jobs report is very backward looking, its making markets move. Equities and bonds seem to be picking the parts of the jobs release they like. Equities like the fact that payrolls were stronger than expected, suggesting the economy is still on a firm footing, while the bond market likes the rise in unemployment and slowdown in wage growth which may keep the case for a December Fed cut just about alive.
Overall though, in the face of so much FOMC hawkishness and without any further jobs reports ahead of the December FOMC meeting, today’s jobs release is unlikely to tip the balance to a December cut.
Market expectations that the Federal Reserve will cut interest rates next month are rising, reports Kathleen Brooks, research director at XTB.
A cut still isn’t seen as likely, though.
Brooks explains:
There is some nuance to this report. The unemployment rate jumped to its highest level since 2021 at 4.4% from 4.3%, and there were revisions to the August payrolls number, which fell to -4k from 22k initially. Added to this, more timely data, including continuing claims rose to 1.97mn, which is a mid-cycle high. This is an interesting development, and the market is boosting the chance of a Fed rate cut in its wake.
Bond yields are falling across the curve in the US, the dollar has given back most of today’s gains, and the market has repriced the chance of a Fed rate cut next month from 25% to 37% after the payrolls release.
This report is significant, since we won’t get an October reading for payrolls, and the November report will not be released until after the Fed’s December meeting. Thus, this is the last labour market report before the next Fed meeting. A rising unemployment rate could trigger a cut, since the Fed has a dual mandate to maintain price stability and full employment.
Some more timely employment data has also been released, showing that the number of Americans filing new applications for unemployment benefits fell last week.
The number of fresh ‘initial claims’ for state unemployment benefits dropped 8,000 to 220,000 in the week ending on 15 November, the Labor Department has reported.
Lindsay James, investment strategist at Quilter, says today’s jobs report is better than expected, meaning it is unlikely to prompt the Federal Reserve into cutting interest rates in December.
James says:
“Today’s delayed September payrolls report came in better than expected, but there is still evidence of continued softness in the US jobs market. Nonfarm payrolls rose by 119,000, while the unemployment rate rose slightly to 4.4%.
“On the face of it, this jobs figure seems a marked improvement and is ahead of expectations, but it is worth noting the downward revisions to what had already been disappointing numbers in the months prior. July’s nonfarm payrolls figure was revised down by 7,000 to 72,000, while August’s dropped from 22,000 into negative territory, at -4,000 – a combined 33,000 lower. A subdued pace of job creation has become somewhat of a norm in recent months, and while September has surprised on the upside, the ongoing data uncertainty leaves a large question mark over the true state of the market.
The Bureau of Labor Statistics has confirmed that the October print will not be released as the data collection did not take place during the government shutdown.
That suggests today’s release will be the final official labour market update before the Federal Reserve’s meeting on 10 December.
US unemployment rate rises to 4.4%
The jobless rate across the US has risen higher than expected too.
Today’s jobs report shows the unemployment rate rose to 4.4% in September, up from 4.3% in August.
The number of people classed as unemployed rose to 7.603m, up from 7.384m in August.
The BLS says:
These measures are higher than a year earlier, when the jobless rate was 4.1%, and the number of unemployed people was 6.9m.
US September jobs report beats forecasts, August a shocker though
Newsflash: The US economy added more jobs than forecast in September, as America’s jobs market picked up after a summer lull.
September’s official employment report, delayed since the start of October by the US government shutdown, shows that nonfarm payroll employment rose by 119,000 in September.
That’s more than twice as many jobs as expected, thanks to gains in health care, food services and drinking places, and social assistance. Job losses occurred in transportation and warehousing and in federal government, though.
But there’s bad news too. The jobs reports from July and August have been revised down, to show that the US economy actually lost jobs in August (!).
The Bureau for Labor Statistics explains:
The change in total nonfarm payroll employment for July was revised down by 7,000, from +79,000 to +72,000, and the change for August was revised down by 26,000, from +22,000 to -4,000. With these revisions, employment in July and August combined is 33,000 lower than previously reported.
