Expert Views on US September Nonfarm Payrolls

(Seoul=Yonhap Infomax) Jung Won Yoon – Analysts said on the 20th (local time) that the uptick in the US unemployment rate for September has reignited expectations for a possible rate cut at the Federal Open Market Committee (FOMC) meeting in December.

However, with nonfarm payrolls growth exceeding market forecasts, there are conflicting signals, and the prevailing sentiment is that further observation is needed.

According to the US Department of Labor, nonfarm payrolls increased by 119,000 in September from the previous month, more than double the market consensus of 50,000.

July’s nonfarm payrolls growth was revised down from 79,000 to 72,000, while August’s figure was revised from 22,000 to -4,000, turning negative. As a result, the combined July-August employment was 33,000 lower than previously reported.

The unemployment rate in September rose to 4.4%, above the forecast of 4.3%, marking the highest level since October 2021 (4.5%). This is a 0.1 percentage point increase from the previous month (4.3%).

Art Hogan, Chief Market Strategist at B. Riley Wealth, noted, “The issue with all of this is that the report is already dated, and there will be no new report before the December FOMC.”

Hogan added, “This will certainly put the Fed in a difficult position, and it will be hard for the probability of a rate cut to increase in any meaningful way.”

He explained that the stock market’s rally following the jobs report was driven more by strong earnings from companies such as Nvidia and Walmart than by the employment data itself.

Seema Shah, Chief Global Strategist at Principal Asset Management, said, “The September report is highly lagging, yet it is still impacting the market. Equity markets liked the stronger-than-expected jobs data, while bond markets were encouraged by the rise in unemployment and the slowdown in wage growth, which kept hopes for a December Fed rate cut alive.”

George Catrambone, Head of Fixed Income at DWS Americas, commented, “The unemployment rate is more important, and this raises questions about the labor market balance,” explaining that this was the reason for the rise in bond prices on the day.

John Briggs, Head of North America Macro Strategy at Natixis, said, “I’m not convinced the September jobs report provides a definitive answer to the December (rate) question,” and argued, “The probability of a December rate cut may be underestimated.”

Daniel Zhao, Senior Economist at Glassdoor, stated, “The September jobs report shows that the labor market remained resilient prior to the shutdown. However, with August’s figure revised to a job loss and the unemployment rate rising, the outlook remains uncertain.”

Zhao also pointed out that the September jobs report is already a snapshot from two months ago and does not reflect the current state of the US market in November.

Peter Cardillo, Chief Market Economist at Spartan Capital Securities, said, “This is the first jobs report released after the shutdown, and it clearly does not reflect what happened in October or what is happening now in November. There are still many layoffs yet to be reported.”

He added, “I don’t think the Fed has enough labor data to make a (rate) decision. The Fed will have to rely on its own instincts.”

Wasif Latif, Chief Investment Officer at Sarmaya Partners, said, “The numbers were clearly stronger than expected, and as a result, we are seeing immediate adjustments in the market regarding whether the Fed will cut rates.”

However, Latif emphasized that it is still too early to draw conclusions.

He said, “It’s not over yet, and there is more to come before the actual Fed announcement. As more data comes in, we will see a tug-of-war between rate cuts and holds.”

Latif also noted that there were likely more layoff announcements in October, which could tilt the market toward a rate cut.

Joseph Brusuelas, Chief Economist at RSM, said, “There was no sign in the September jobs report that the labor market has deteriorated sharply enough to guarantee a Fed rate cut.”

He assessed that the September jobs report indicated moderate growth in the economy and employment.

Nancy Vanden Houten, Senior Economist at Oxford Economics, also commented, “The September jobs report is backward-looking, but it provided some relief that the labor market did not collapse before the shutdown.”

She added, “There was nothing in the (September jobs report) data to change our forecast that the Fed will hold rates steady at the December FOMC.”

jwyoon2@yna.co.kr

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