In this morning’s data, the economy added 263,000 jobs in September, slightly higher than expected. The Health Care and Social Assistance industry was relatively strong, while the Retail Trade and the Transportation and Warehousing industries were weak. The Unemployment Rate ticked two tenths lower to 3.5% and the Labor Force Participation Rate at 62.3% is one tenth lower than the previous month. Average Hourly Earnings increased 0.3% in September and is 5.0% higher on an annual basis, both as expected. Average Weekly Hours were 34.5 which is the same as last month’s figure.
Overall, the labor market remains stable as the headline jobs figure is still increasing, albeit a bit slower than previous months, coupled with a drop in the unemployment rate. Wages are also still increasing, even with a slowdown in job openings reported earlier this week in the JOLTS data, which implies inflationary pressures remain in the labor market. Given these dynamics, the Federal Reserve should be vigilant in policy tightening through interest rate increases and reducing their balance sheet in the coming weeks to deal with stubbornly high levels of inflation. The impact of this policy on the labor market and overall economic activity will be key in the months ahead.
Following the release of the jobs report, U.S. 10-year treasury yield ticks higher and equity futures are lower as we head into the market open.
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