In this morning’s data, the economy added 119,000 jobs in September, more than double what was expected. However, the previous month was revised lower to -4,000 in August. In September, the Leisure and Hospitality industry and Private Education and Health Services industry were relatively strong, while the Transportation and Warehousing industry was relatively weak. The Unemployment Rate increased one tenth to 4.4%, higher than expected and the Labor Force Participation Rate at 62.4% is one tenth higher than the previous month. Average Hourly Earnings increased 0.2% in September, less than expected, and grew 3.8% on an annual basis. In addition, Average Weekly Hours were 34.2, which is the same as the revised figure from the previous month.
Meanwhile, Initial Jobless Claims were 220,000 for the week ending November 15th, less than expected. Continuing claims were 1,974,000 for the week ending November 8th, higher than expected.
Overall, a mixed payrolls report for September with a headline jobs increase that was more than expected coupled with an increase in the unemployment rate. It is notable that August payrolls were revised lower, indicating job losses, especially when you couple it with the job losses that occurred in June of this year. Strength in the leisure and hospitality industry and education and health services was offset by weakness in the transportation and warehousing industry. The services part of the economy appeared to drive job gains in September. In addition, the participation rate ticked slightly higher while the increase in average hourly earnings remains just below the long-term average.
Initial jobless claims were lower than expected in the first full report following the government shutdown. They remain at a healthy level, well below the 300k which many view as the top threshold for a solid labor market. However, continuing claims were more than expected and came in at levels not seen since late 2021.
While a bit stale, the payrolls report shows a mixed picture for the labor market in September. The initial claims reading and elevated continuing claims data only add to the mixed reality for the labor market. Meanwhile, inflation measures have leveled out above the Federal Reserve targets, giving some voting members pause when considering further interest rate reductions. As more and more economic reports are revealed in concert with the government reopening, the interpretation of economic conditions by the Fed will be key for the economy and markets in the coming weeks.
In all, the yield on the 10-year US Treasury ticks lower following the report and equity futures are higher as we head into the market open.
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