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The September jobs report is confirmation of a soft to no landing scenario. 254k jobs added!! What does it mean?
It may put the Fed's dual mandate (full employment and inflation) back into balance. They've mostly been focused on jobs, not inflation of late.
Wage increases of 4.0% suggests a big uptick in ๐ณ๐ฆ๐ข๐ญ ๐ธ๐ข๐จ๐ฆ ๐จ๐ณ๐ฐ๐ธ๐ต๐ฉ for the second month in a row. This feeds into inflation (like it or not).
The overwhelmingly positive report felt like a change in the tide.
It may suggest the Fed is no longer behind the ball with interest rates.
A swift jump in bond yields and reduced expectations for interest rate cuts in 2024 (to 2 from 3-4) certainly suggest that.
Leading indicators, JOLTS and jobless claims, still point to a stalled, but stable job market. Which is a good thing.
People are still employed and higher wages will help support spending.
As uncertainty from the election, tax policy, and monetary policy subsides in the coming month, could provide a boost to hiring.
Below are a couple of standout point from the report.
The Good News
- Real wages up more than 1% for 2 months in a row.
- Unemployment was lower at 4.0%.
- Under-employment dropped to 7.7% from a recent high of 7.9%.
- Gains in full-time employment vs. a 12 month average decline.
- Construction job adds trending higher at 25k (saw this in JOLTS).
- Food service and drinking places employment jumped 69k.
The recalibration in the jobs market:
- Technology jobs losses may be stabilizing.
- Part time work for non-economic reasons (because people choose to work PT) continues to rise.
- % of people holding multiple jobs is steadily moving higher.
- MOST SURPRISING is the amount of the labor force holding 2 part time jobs is 15% higher than historic levels.
- Reminds me of the mid-90s recalibration of jobs.
What to watch:
- Job growth in health care and government, key drivers of growth in the past year, is still trending below the 12 month average.
- Wage growth was strong, but not necessarily broad range.
- Is the higher part-time a result of an increasing number of people looking for ways to make ends meet?
Related: Upbeat or Not? How Timing Influences Consumer Sentiment