October Employment Numbers

• October 9, 2022
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Labor Department data released Friday morning showed the US economy added 263,000 jobs in September, a slower pace than the previous month but probably not enough for those who want the Fed to pause sooner rather than later.

Industry expert Barry Habib had the following gleanings from the household survey. Remember, the household survey is different from the establishment survey.

“Jobs Report Insights

There were 204,000 job creations in the Household Survey, but almost all of them were from older men.

45‒54: 223,000 job creations

55+: 355,000 job creations

Total = 578,000… which means losses of 300,000 in all other categories

Household Survey

Unemployment rate declined from 3.7% to 3.5%

204,000 job creations, but labor force decreased 57,000—much of the decline in UR was for the wrong reasons.”

Not certain what to make of that, but just thought it odd. And speaking of odd, separately, there were 382,000 new employees without high school degrees.

In fairness, the household data is notoriously volatile. Next month it might show a very different trend. But the 3.5% unemployment is what got the market’s initial focus. That seems to give the Fed more running room. The market wants softer data so the Fed can pause. This was not it.

Peter Boockvar summing it up:

“Bottom line, while the data was about as expected, the drop in the unemployment rate is seemingly what the markets are obsessed with because of what it means for the Fed. This even though job hirings have decelerated now for a 2 ^nd month with August and September averaging 289K and I expect this to continue. Because of a big July, the 3-month average job gain was 372K vs. the 6-month average 360K and the 12-month average of 474K. As stated, wage gains are no longer accelerating but hanging in there with 5%-type gains, still below the rate of inflation however. As for the still-low unemployment rate and when combined with the low level of initial jobless claims, the pace of firings remains muted and this of course gets the Fed all fired up about continuing with its aggressive rate hikes.” 

I think 75 basis points is very much on the table for the November meeting, exactly one week before the mid-term elections. What does that mean? How much does the Fed want the market to be happy one week out? Conventional wisdom says they would pay it no attention. I hope this to be the case.

I am still in the camp that they’ll keep raising rates until something really breaks. A 5% Fed funds and 5% unemployment should be more than enough to kill inflation. And a few other things…