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MNI US Employment Insight, Sep'24: Cooler But Not Sharply So

Fedspeak Plus A Mixed But Not Sharply Weaker Report Goes Against A 50bp Cut This Month
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Executive Summary

  • Nonfarm payrolls growth was weaker than expected in August and also saw heavy downward revisions, even if the latter were mainly in June rather than a sign of a particularly sharp recent deterioration.
  • Importantly, the unemployment rate also broadly stabilized at 4.22% after 4.25% (flattered by rounding), ruling out an increase that could have been seen as a sign of non-linear climb after the 0.20pp rise in July. 
  • AHE growth was clearly stronger than expected but is seen against a backdrop of strong productivity growth – it isn’t likely to be a source of elevated inflationary pressures anytime soon per Powell.  
  • When combined with prominent FOMC members Williams and Waller not explicitly calling for a 50bp cut, odds of such a move at the Sep 17-18 FOMC meeting faded. 
  • At still 31bp of cuts priced, US CPI and PPI inflation this week remain a notable risk event with the FOMC in blackout, but we suspect an inline print would see 50bp odds fall further. 
  • A clear majority of analysts look for the Fed to start its easing cycle with a 25bp cut. 

PLEASE FIND THE FULL REPORT HERE: USEmploymentReportSep2024.pdf

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Executive Summary

  • Nonfarm payrolls growth was weaker than expected in August and also saw heavy downward revisions, even if the latter were mainly in June rather than a sign of a particularly sharp recent deterioration.
  • Importantly, the unemployment rate also broadly stabilized at 4.22% after 4.25% (flattered by rounding), ruling out an increase that could have been seen as a sign of non-linear climb after the 0.20pp rise in July. 
  • AHE growth was clearly stronger than expected but is seen against a backdrop of strong productivity growth – it isn’t likely to be a source of elevated inflationary pressures anytime soon per Powell.  
  • When combined with prominent FOMC members Williams and Waller not explicitly calling for a 50bp cut, odds of such a move at the Sep 17-18 FOMC meeting faded. 
  • At still 31bp of cuts priced, US CPI and PPI inflation this week remain a notable risk event with the FOMC in blackout, but we suspect an inline print would see 50bp odds fall further. 
  • A clear majority of analysts look for the Fed to start its easing cycle with a 25bp cut. 

PLEASE FIND THE FULL REPORT HERE: USEmploymentReportSep2024.pdf

Keep reading...Show less