Another Disappointing U.S. NFP of Only 142K in September | Gold Rallies

The market expected and the Fed needed a strong NFP report to reduce volatility and raise the odds of a rate hike this year. Oh well – not this time. The U.S. non-farm payroll report came up short again with only 142K jobs added in September. The ADP report estimated an increase of 200K jobs and the market expectations were at 201K for September. But this isn’t all, there were also downward revisions for previous months – this report, in the past, tended to mostly show upward revisions.  The main sectors that expanded were in health care and information, while mining employment declined. The rate of unemployment remained flat at 5.1%. The U.S. dollar weakened against the Euro and yen while gold and silver rally.

The only silver lining of the recent report was the drop in U6 unemployment measurement, a broader measure of unemployment, as it reached 10% — the lowest level since the middle of 2008.

But that’s the only positive point from the recent report.  We was downward revisions for the previous months’ figures — with a total revision of 59K for August and July combined.

nfp and unemp Oct

Source: BLS

In September, the rate of U.S. unemployment was 0.8 percent points below the rate recorded in September 2014.

Moreover, the number of unemployed persons also (7.915 million) declined by 114K in September compared to the previous month. But the civilian labor force also decreased by 350K. So there was a drop in number of people participating in the labor force and in the number of unemployed. Thus, the participation rate decreased to 62.4%.

Finally, wages didn’t grow in September compared to August – the hourly earnings remained $25.09 per hour; wages – an annual gain of 2.2%, year on year.

Final note

The NFP report is still just another data point from an array of figures needed to consider. As the labor market progresses, we may start to see a slower growth in jobs. We are still seeing growth in jobs and fall in U6.  Nonetheless, the lack of growth in wages, low participation rate and slower rise in jobs are still factors that could cause concern in the Fed. So the labor market needs to improve and show higher figures to have the Fed move towards raising rates.  For further reading: