Sentiment Improves As NFP Confirms Robust US Jobs Sector

This week the risk sentiment has been switching on and off, but stock markets closed the week on a positive note, as NFP showed that the US jobs sector is in decent shape. The NFP number for September jumped above 250K while the unemployment rate fell to 4.1%, with revisions also being positive.

US Employment Reports Released This Week

In fact, all employment reports released this week apart from the ISM employment, showed improvement. The week started with the JOLTS Job Openings which jumped by more than 1 million to reach to 8.04M in August from 6.67 million in July. Including the Non-Farm Payrolls report, the picture of the US labour market shows a robust sector, which confirms that the US economy is not headed for a recession, therefore the FED will keep rate cuts steady.

• JOLTS Job Openings surged to 8.04M in August, up from a revised 6.67M in July.
• ADP Non-Farm Employment Change rose to 143K after dipping below 100K in August.
• Unemployment Claims on Thursday remained stable, showing no significant change.

US September 2024 NFP Employment Data Highlights:

• Non-farm payrolls: +254K vs +140K expected
  (August revised to +159K from +142K)
• Net revision (last two months): +72K vs prior -86K
• Unemployment rate: 4.1% vs 4.2% expected
  (Unrounded: 4.0510% vs 4.220%)
• Labor force participation rate: 62.7% (unchanged)
• Private payrolls: +223K vs +118K prior
  (Revised to +114K)
• U6 underemployment rate: 7.7% vs 7.9% prior
• Average hourly earnings: +0.4% m/m vs +0.3% expected
  (Year-over-year: 4.0% vs +3.8% expected)
• Average weekly hours: 34.2 vs 34.3 prior
• Manufacturing payrolls: -7K vs -24K prior
• Household survey: +430K vs +168K prior
• Government jobs: +31K vs +24K prior
• Full-time jobs: +631K vs -438K prior
• Part-time jobs: -201K vs +527K prior

• Full report

This report shows solid labor market strength, highlighted by notable gains in non-farm payrolls and a drop in the unemployment rate. Before its release, markets were pricing in a 32% chance of a 50 basis point rate cut by the Fed. However, with the unemployment rate now down to 4.051%, just shy of 4.0% (from 4.22% prior), this is the strongest jobs data since March. The USD and stock markets rallied in response, and the bullish momentum is clear. Unlike reports that leave room for dovish interpretations, this one firmly supports a positive market outlook.