The US Bureau of Labor Statistics (BLS) published a mixed set of employment figures for September, creating an uncertain picture for the world's largest economy that's unlikely to sway policymakers decisively in either direction when the US Federal Reserve discusses interest rates next month. Investors held back from lurching to buy or sell following the release.
The BLS reported 119,000 non-farm payrolls (jobs created) for September, above expectations of 50,000 according to a consensus estimate produced by TradingEconomics. In the same disclosure, the agency revised down August’s figures, creating an even more mixed message of the health of the US economy for that month.
Instead of the initially reported gain of 22,000 jobs, the government now says that 4,000 positions were lost. At the same time, the national unemployment rate increased to 4.4% from 4.3%, this time negatively missing estimates. Initial jobless claims increased by 220,000 versus 230,000 expected.
Investor reaction to the release was initially muted. The yield on the benchmark 10-year US Treasury dipped 1.9 basis points to 4.115%, while the S&P 500 nudged slightly higher, having already opened positively after the previous day's earnings reports. Bitcoin declined, flirting once again with the $90,000 mark in the two hours following the employment information release.
Fed governors prepare to react
Until April this year, the US was typically adding about 147,000 (non-farm payroll) jobs per month. Since May, the situation has soured. Monthly employment gains have slowed to an average of just 31,000, according to BLS data. That's about one fifth of the pace seen in early 2024.
How this will impact Fed's decision is hard to gauge. The government isn't planning to publish a set of figures for October, while the November jobs report, usually issued in early December, has been rescheduled to 16 Dec after the meeting of the FOMC, the Fed committee that decides interest rates. This makes the latest report for September one of the key data points shaping policymakers’ views ahead of their decision.
Missing report
With the October report missing – and recent data already pointing to a softening labour market – investors are likely to adopt a more cautious stance. Each jobs release carries significant weight in shaping expectations, as economists and policymakers immediately feed the numbers into their core models, influencing everything from US monetary policy to global economic projections. That's why the employment report remains one of the most consequential and widely acted-upon data releases in traders' calendars for any asset class.
FOMC members were already divided over what to do with rates, as the publication of last month's FOMC minutes revealed. The job creation from September is unlikely to shift policymakers decisively in either direction amid a somewhat clouded picture of the economy based on an incomplete set of data.
More 'fog'
FOMC members would need a significant positive or negative surprise to be persuaded to cut or hike rates, not more “fog,” as Fed Chair Jerome Powell has previously described the situation.
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