Daily Spotlight

Jobs Jump

The Bureau of Labor Statistics (BLS) reported that the U.S. economy generated 254,000 new jobs in September, well above our forecast of 135,000 and the consensus of 140,000. August's result was revised higher by 17,000 to 159,000. July was revised up by 55,000 to 144,000. September's increase in payrolls and revisions higher to past results took the three-month average up to 186,000, just below the 12-month average of 203,000. With inflation descending towards 2%, the Fed felt comfortable reducing the federal funds rate by 50 basis points last month to support the economy and bolster the job market. But there is little evidence of weakness in this morning's report. The September unemployment rate declined to 4.1%, a tenth below our estimate and consensus. Average hourly earnings increased 13 cents month to month and are 4.0% higher year over year (compared to 3.9% in August). The average workweek ticked down to 34.2 hours. Job gains continued to trend higher in food services and drinking places, healthcare, government, social assistance, and construction. Employment showed little or no change in mining, quarrying, and oil and gas extraction; manufacturing; wholesale trade; retail trade; transportation and warehousing; information; financial activities; professional and business services; and other services. After the report, stock futures rose and the yield on the 10-year Treasury climbed. Futures contracts suggested a 90% probability that in November the Fed will reduce the funds target by 25 basis points and a 10% chance that it will cut the funds rate by 50 basis points, compared with probabilities of 72% and 28%, respectively, before the report. The probability that the funds target will be lower by 75 basis points or more from current levels after the December meeting was 26%, down from 54% before the release....  the federal funds rate by 50 basis points last month to support the economy and bolster the job market. But there is little evidence of weakness in this morning's report. The September unemployment rate declined to 4.1%, a tenth below our estimate and consensus. Average hourly earnings increased 13 cents month to month and are 4.0% higher year over year (compared to 3.9% in August). The average workweek ticked down to 34.2 hours. Job gains continued to trend higher in food services and drinking places, healthcare, government, social assistance, and construction. Employment showed little or no change in mining, quarrying, and oil and gas extraction; manufacturing; wholesale trade; retail trade; transportation and warehousing; information; financial activities; professional and business services; and other services. After the report, stock futures rose and the yield on the 10-year Treasury climbed. Futures contracts suggested a 90% probability that in November the Fed will reduce the funds target by 25 basis points and a 10% chance that it will cut the funds rate by 50 basis points, compared with probabilities of 72% and 28%, respectively, before the report. The probability that the funds target will be lower by 75 basis points or more from current levels after the December meeting was 26%, down from 54% before the release.  more

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