Reporter of the Economic Business: Cai Ding Editor of the Economic Business: Tan Yuhan
Picture source: Photo Network_500372317
Local time on October 7 (Friday), data released by the U.S. Department of Labor showed that the number of new non-farm employment in the United States exceeded expectations in September, and the unemployment rate fell to a low of nearly 50 years again. This indicates that the US labor market may still be tense, and it also once again slim the market's expectations that the Federal Reserve's policy will turn faster than expected. After the data was released, the three major indexes of U.S. stocks, collectively opened lower, the Dow Jones Industrial Average fell 0.87%, the Nasdaq fell 1.7%, and the S&P 500 index, fell 1.21%.
Specifically, US non-farm employment increased by 263,000 in September, the smallest monthly increase since April 2021 , with an expected increase of 255,000 and an increase of 315,000 in the previous value; the US unemployment rate in September recorded 3.5%, expected 3.7%, and the previous value was 3.7%.
Among the closely watched wage data, the average hourly wage in the United States increased by 5% year-on-year in September, which was still far higher than the normal level before the outbreak of the new crown pneumonia epidemic, with an expected increase of 5.1% and a previous value of 5.2%. In September, the average hourly wage of non-farm wage in the United States increased by 0.3% month-on-month and expected to increase by 0.3%, and the previous value increased by 0.3%. In September, the labor force participation rate was 62.3%, and the previous value was 62.4%.
Image source: Bloomberg
Bloomberg's report said that non-agricultural data in September showed that the strong momentum of the U.S. job market still exists. Despite some signs that labor demand is slowing, such as the decline in the number of recently announced vacancies, many employers are still short of staff and continue to recruit at a steady pace. This strong momentum not only supports consumer spending, but also drives wage growth.
However, Fitch rating US regional economic director Olu In a comment email to Daily Economic News , Sonola said, "The number of new non-farm employment in the United States fell to 263,000 in September, and the number of JOLTs vacant jobs decreased by 1 million, which clearly shows that the previously hot labor market is cooling down. In September, the labor participation rate of dropped slightly to 62.3%, leading to a slight decline in unemployment. (We believe) determined to fight the passport Against the backdrop of inflation, the Federal Reserve will interpret the weakening of labor demand, marginal supply decline and slowing wage pressure in the September non-agricultural report as mixed joys and sorrows. ”
"Daily Economic News" reporter noticed that since the Fed's next interest rate meeting was November 2, this September non-agricultural employment report will be the last employment report before the Fed's next meeting. However, the September inflation data to be released next week will also play an important role in the Fed's decision-making.
According to the CME Group's "Feder Observation" tool, 20 minutes after the non-farm data was released, the federal funds futures market believes that the probability of the Fed hike 75 basis points for the fourth consecutive hike at its meeting in early November was 78.7% (85.5% before the data was released), while the probability of hiking 50 basis points was 21.3%.
Image source: CME
In addition, the futures market believes that the probability of the Federal Reserve raising interest rates by 50 basis points at its current meeting on December 14 is 67.4%, and the probability of raising interest rates by 25 basis points at its meeting on February 1 next year is 65.1%. By then, the federal funds rate range will reach 4.50% to 4.75%.
Image source: CME
Federal officials including Fed Chairman Powell said they expect rate hikes will bring "some pain" to the U.S. economy. FOMC members also said in September that they expect the U.S. unemployment rate to rise to 4.4% in 2023 and remain near this level, and will drop to 4% in the long run.
Daily Economic News
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