The jobs report is what we’ve all been waiting for this week and it turned out to be a disappointment. The US economy added only 194K jobs in September, the lowest so far this year and well below analysts' estimates of 500K.
“Recent employment changes are challenging to interpret, as pandemic-related staffing fluctuations in public and private education have distorted the normal seasonal hiring and layoff patterns,” the Bureau of Labor Statistics said in the release.
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Nonfarm employment has increased by 17.4 million since lows from April 2020 but is down by 5.0 million, or 3.3%, from its pre-pandemic level in February 2020. Source: Bloomberg via ZeroHedge
Job gains occurred in leisure and hospitality (74K), professional and business services (60K), retail trade (56K) and transportation and warehousing (47K). Meanwhile, employment declined sharply in the government sector (-123K). However this is probably a short-lived decline in temporary employment until the debt limit is raised. In addition, the September hurricanes may have had a certain impact on employment. Also the automotive industry started to show signs of weakness - this has little impact on the data, but indicates rising problems on the supply side.
The automotive and ... the government sectors are slowing down. Source: Bloomberg
Still despite weak employment report, many economists believe that the lacklustre numbers may not sway the Federal reserve from starting a tapering of its asset purchases as early as November because other indicators, namely very strong decline in the unemployment rate (from 5.2% to 4.8%), but also upbeat ADP report, showed that the labor market is doing well. In addition, wages are clearly rising - this is another factor which supports the start of the tapping process.
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