U.S. NFP Didn’t impress with 156K Jobs; but the market still looks for a Fed hike this year

The U.S. non-farm payroll didn’t impress the market and fell, yet again, of market expectations with 156K jobs in September: The ADP estimated a gain of 154K jobs while the market expect a gain of 172K. The growth in wages, was also lower than expected as wages increased by 6 cents, month over month. The rate of unemployment picked up to 5%. The U.S. dollar declined against the majors while gold and silver remained nearly flat. Let’s review this report:  

The U6 unemployment measurement, a broader measure of unemployment, didn’t move and maintained its rate at 9.7%. In terms of revisions, there was a total downward revision of 7K for August and July combined.

In September, the rate of U.S. unemployment was 0.1 percent points below the rate recorded in September 2015.

The number of unemployed persons (7.939 million) rose by 90K in September compared to the previous month. And the civilian labor force also increased by 444K. So there was a rise in number of people participating in the labor force and in the number of unemployed. In the end, the participation rate edged up to 62.9%.

Finally, wages rose in September compared to August – the hourly earnings reached $25.79 per hour — a gain of 6 cent or 0.1%, month over month –lower than expected (exp. were for 0.2% gain); wages grew at an annual rate of 2.6%, year on year – a faster pace than last month.


Even though the headline figure fell short of market estimates, analysts and FOMC members still kept the market on course to believe the market is heading towards a rate hike this year – most likely in December. And considering wages and the participation rate have gone up, it does seem the labor market is doing well. So for now, it appears the Fed will stay on course to raise rates coming December, unless, of course the next two NFP reports show a slower growth in wages and growth in jobs or both.

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