US September labour market report: Neither here nor there - ING

Rob Carnell, Chief International Economist at ING, suggests that US NFP are reasonable, but not great payrolls, an uptick in the unemployment rate, and softish wages growth – but still good enough to keep thoughts of a December rate hike alive – pending the market reaction to the Presidential Election, and further adequate labour reports.

Key Quotes

“The US labour report came in a little lower than expectations, but we would stress that the 156K non-farm payrolls jobs created in September will probably be enough to satisfy all but the most dovish members of the FOMC that the labour market continues to make progress.

The unemployment rate ticked up from 4.9% to 5.0%, but most of that appeared to be a rounding error. The labour force surged 444,000, of whom, most (354,000) found employment, so this is really only a very modest disappointment.

More worryingly, the average earnings figures rose far less than we had hoped – rising 0.2%MoM, and just scraping a 2.6%YoY gain (up from 2.4%YoY) in line with expectations, but we expect this was another rounding result, this time, a more helpful one.

Markets will see nothing in this report to encourage thoughts of a November FOMC rate hike – most forecasters still expect the Fed to hike in December, and this release is good enough, without being particularly good, to keep such expectations firm.

That said, there is still the small matter of the 8 November US Presidential Election result to get out of the way before the 14 December FOMC meeting, and also another 2 payrolls releases. So although a December hike looks good on paper, a lot can still go wrong between now and then, and the Fed might still find a reason for inaction until 2017.”