Nonfarm Payrolls Data for September – What it means for the economy

 

Nonfarm Payrolls measures the change in the number of people employed during the prior month, excluding workers in the farming industry. Given that full employment is one of the Federal Reserves mandates, it is very closely watched.

A reading that is stronger than forecast is generally supportive (bullish) for the USD, while a weaker than forecast reading is generally negative (bearish) for the USD.

The US Bureau of Labor Statistics released the nonfarm payrolls (NFP) report for September 2023 today, showing that the economy added 336,000 jobs. This beat market expectations of 170,000 jobs and was the strongest job gain in eight months. The unemployment rate held steady at 3.8% in September, which is near a 50-year low. Job gains were broad-based, with leisure and hospitality, government, health care, professional and scientific services, and social assistance adding the most jobs.

The 336K jump in headline payrolls – the biggest since January – was stunning when considering that it was not only above the highest Wall Street estimate but was a 6-sigma beat to expectations.

While part-time workers rose for the third consecutive month to 27.336 million and the highest since January, full-time workers have decline for three straight months, and at 134.167 million, this was the lowest number going back to February!

Looking at the numbers first hand, You wouldn’t be far off if you concluded that most of the job gains in September were either from part-time workers or multiple jobholders forced to get another job in addition to their current one, and thus be counted by the BLS as two distinct jobs (or more). Also one stark observation on the multiple jobholders: In September, the subset of multiple jobholders who held both a primary and secondary full-time job just hit an all time high.

The S&P 500rose 1.5%, the Dow Jones Industrial Average fell 1.3%, 417 points, Nasdaq rose 1.7%. Treasury yields retreated from session highs, but upside was supported by growing bets on another Federal Reserve rate hike by the end of year ticked higher.

At the end of the day the question arises whether or not the jobs report would cast out on another rate hike for the Fed this year? Well as of now it hasn’t as it keeps a rate hike in play and it also pushed out expectations for a rate cut next year to September from July, for the time being we can expect to see the dollar rally persist, the yields remain high. So it all now rests on next week’s US inflation report.

Till then, Trade Safe. Happy Trading .