A Large Beat For Payrolls and Surprise Decline In The U/E Rate Sees 50bp Cut Calls Disappear
MNI (LONDON) - Executive Summary
- You have to look very hard indeed to find any soft spots within the September payrolls report.
- Payrolls growth beat consensus by more than 100k along with strong upward revisions that importantly revised away July weakness which had played a large role in the Fed’s 50bp start to the cutting cycle.
- The unemployment rate was much lower than expected at 4.05%, very nearly rounding down to 4.0% vs consensus of 4.2% that had seen mild risk of a 4.3% print.
- Alternate labor indicators have been more mixed: resilient jobless claims and higher job openings have clashed with genuinely soft quit rates and consumers increasingly feeling labor market pressures.
- The flagship payrolls report wins out though. Coupled with more patient Fedspeak and other upward surprises such as ISM Services, and odds of a second 50bp cut from the Fed have seemingly disappeared.
- Fed Funds price 23bp of cuts for the Nov 7 FOMC decision vs 34bp prior to the payrolls report and three analysts have dropped their 50bp cut calls to leave very few looking for the move.
- However, there is seen to be very low probability of a November ‘skip’ whilst the cumulative 50bp of cuts priced to year-end is consistent with the median FOMC dot from last month’s SEP.
PLEASE FIND THE FULL REPORT HERE: USEmploymentReportOct2024.pdf
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