US Non-Farm Payrolls September Analysis: In-Depth Look and Market Reactions

Key Data Overview

On Thursday, Beijing time, the US seasonally adjusted non-farm payroll data for September was released, revealing an addition of 119,000 jobs, surpassing expectations of 50,000. This marks the largest gain since April. However, the previous month's reading was revised down from 22,000 to -4,000. The unemployment rate rose to 4.4%, exceeding the expected 4.3%. Average hourly wage growth came in at 3.8% year-on-year, above the anticipated 3.7%. However, average hourly wage growth was 0.2% month-on-month, below the expected 0.3%.

Prior Data Revisions

The U.S. Bureau of Labor Statistics indicated downward revisions to the non-farm payroll figures for July from 79,000 to 72,000 and for August from 22,000 to -4,000. Following revisions, the combined job creation for July and August was 33,000 lower than initially reported.

Market Reactions

Following the data release, spot gold experienced a sharp decline of nearly $20 before recovering some of its losses. Non-dollar currencies saw a short-term uptick, with the Euro rising 30 points against the dollar, the British Pound gaining nearly 35 points against the dollar, and the U.S. Dollar falling almost 40 points against the Japanese Yen.

Interest Rate Expectations

Interest rate swap markets continue to indicate a low probability of a rate cut by the Federal Reserve in December. Following the release of the latest economic data, traders have increased bets on a Federal Reserve rate cut, but still expect the Fed to skip a rate cut in December.

Sector Analysis

The healthcare sector saw an addition of 43,000 jobs, with outpatient healthcare services adding 23,000 and hospitals adding 16,000. Food service and drinking places were also active in hiring, adding 37,000 jobs.

Government Cut Impact

Federal government employment fell by 3,000 jobs, down by 97,000 since its peak in January.

Sector Challenges

Transportation and warehousing employment decreased by 25,000 in September, with cuts in warehousing, storage, courier, and messenger jobs. The manufacturing sector, vital and politically hot, saw another decline of 6,000 jobs in September.

Expert Opinions

Ira Jersey, a U.S. interest rate strategist at Bloomberg Intelligence, notes that private non-farm job growth remains below 100,000, but the moderate rebound in September is occurring alongside a rise in the unemployment rate, which could be the focus for interest rate markets. He adds that the slowdown in wage growth is the most concerning, as it is leading to a deceleration in overall labor income. Kay Haigh of Goldman Sachs Asset Management believes that a December rate cut is still possible given the continued weakness in the unemployment rate. Steve Sosnick of Interactive Brokers views this report as "possibly stale" but it is the only one currently available to the market.

Unemployment Claims Data

The latest unemployment claims data shows initial claims at 220,000 for the week ending last Saturday, matching the lowest reading since September. Despite numerous reports of corporate layoffs, this is at least a sign of stability in the labor market.