Employment Report September 2022:

Job growth fell below expectations in September and the unemployment rate fell despite the Federal Reserve’s efforts to slow the economy, the Labor Department said on Friday.

Nonfarm payrolls rose 263,000 for the month, compared with the Dow Jones estimate of 275,000.

The labor force participation rate fell to 62.3% and the size of the labor force fell to 57,000, leaving the unemployment rate at 3.5% against the forecast of 3.7%. A more inclusive measure, which includes discouraged workers and those holding part-time jobs for economic reasons, saw an even sharper decline from 7% to 6.7%.

September’s payrolls marked a decline from a gain of 315,000 in August and tied for the slowest monthly increase since April 2021.

“Depending on your view of optimism and pessimism, the economy, there’s a little something for everyone in this report,” said Liz Ann Saunders, chief investment strategist at Charles Schwab. “Obviously, the market is not happy, but the market is generally not happy these days.”

Jim Cramer says the September jobs report shows the Fed still needs to do more

Stock market futures Moved down after release Meanwhile, yields on government bonds rose. Investors were looking to the numbers for an indication of how the Federal Reserve will act in an effort to reduce inflation.

“It still puts the nail in the 75 coffin [basis point rate increase] In November,” said Jeffrey Roche, chief economist at LPL Financial. The basis point is 0.01 percentage point.

Among closely watched wage numbers, average hourly earnings rose 0.3% in the month, according to estimates, and were up 5% from a year ago.

From a sector perspective, leisure and hospitality led the gains with an increase of 83,000, leaving the industry 1.1 million jobs below its February 2020 pre-pandemic levels.

Elsewhere, health care added 60,000, professional and business services rose 46,000 and manufacturing contributed 22,000. Construction was 19,000 and total business was 11,000.

A 25,000 drop in government jobs contributed heavily to the report missing expectations. Hiring at the state and local level is highly seasonal, so the decline points to a report that was otherwise largely in line with expectations and shows a flexible job market.

On the negative side, financial activities and transportation and warehousing both lost 8,000 jobs.

The report “shows that consumers and corporates are very resilient despite interference from the Russia-Ukraine war, interest rates and housing market momentum,” Roche said. “It may add to the narrative of a soft landing [for the economy] It seemed elusive for a while.”

Five experts break down September's key jobs report

The report comes amid months of efforts by the central bank to reduce inflation, which is nearing its highest annual rate in more than 40 years. The central bank has raised rates five times this year by a total of 3 percentage points and is expected to continue raising rates until at least the end of the year.

Despite the increase, job growth was relatively strong as companies faced a large mismatch between supply and demand. Although the increase in average hourly earnings has been well below the rate of inflation, it has helped lift wages, which recently stood at 8.3%.

Fed officials, including Chairman Jerome Powell, have said they expect rate hikes to cause “some pain” in the economy. Federal Open Market Committee members in September said they expect the unemployment rate to rise to 4.4% in 2023 and hold around that level for a longer period before falling to 4%.

Markets widely expect the central bank to continue its pace of rate hikes with another 0.75 percentage point increase in November. Traders gave an 82% chance of a three-quarter point move following the jobs numbers, and expect another half-point increase in December, which would take the federal funds rate to a range of 4.25%-4.5%.

Leave a Reply

Your email address will not be published.