4 October 2024
If you are covering the latest US jobs data, please see the following comment from Richard Carter, head of fixed interest research at Quilter Cheviot:
“The increase in nonfarm payrolls reported in today's US jobs data has knocked economist expectations out of the park, coming in at 254,000 in September – over 100,000 higher than had been expected. The unemployment rate also dipped to 4.1%, down from 4.2% reported last month.
“Following a considerably less positive report last month, these latest figures will reaffirm to the Federal Reserve that it does not yet need to panic. Though the labour market has been weakening for some time now and the economic odds appear to be against it, there is still the potential for surprising strength.
“Wage growth came in at 4.0% on an annual basis, up 0.2% compared to 3.8% reported last month. Though this is heading in the wrong direction in the Fed’s view, it has not ticked up so much that it will cause huge concern.
“Earlier this month, the Fed opted to kick things off with a half point interest rate cut, and the market has been pricing in further reductions at its next two meetings. Current expectations are pricing in cuts totalling around 66bps before year end, but the market appears to be getting ahead of itself. Today’s stronger than expected jobs print means the Fed could opt to take a much more ‘slow and steady’ approach, with a smaller 0.25% interest rate looking increasingly likely at its next meeting.
“Nonetheless, the Fed’s stance shifted at September’s meeting and we are likely to see it continue on a path of further rate cuts for some time yet in hopes of helping to prop up the economy. There will be another jobs print out before the Fed’s next meeting, as well as numerous other key data points, so there will be a lot for the Fed to weigh up.”
