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MNI US Employment Insight: Storm Disruption Still Unclear

Genuine Data Quality Concerns Cloud Interpretation Of Weak Report
HomepageEmployment InsightMarketsStory

Executive Summary

  • Nonfarm payrolls growth was much weaker than expected in October at 12k (cons 100k). 
  • There was clear impact from strikes and some signs of storm disruption although we think some are overstating just how much of an impact the latter had (but will only have a better idea in the state-level details released on Nov 19). 
  • Importantly, there were also some heavy downward revisions that clearly can’t be linked to hurricane or strike disruption, and leave September strength as more of anomaly at this stage. 
  • There are however some real data concerns that mean the report needs to be taken with a pinch of salt, including an exceptionally low initial response rate and a particularly favorable seasonal factor in October after a large revision to the September seasonal factor.
  • The unemployment rate perhaps offers the cleanest read here, rising from 4.05% to 4.15% but off the 4.25% seen in July that had helped drive the 50bp cut from the Fed in September. It also sees scope for a downward revision to the median FOMC forecast of 4.4% for 4Q24.
  • The bottom line is that the Fed is in cutting mode and when the data is mixed, they will continue on the course set out in September, through the balance of the year at least. That argues for two 25bp cuts. 

PLEASE FIND THE FULL REPORT ATTACHED HERE: USEmploymentReportNov2024.pdf

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Executive Summary

  • Nonfarm payrolls growth was much weaker than expected in October at 12k (cons 100k). 
  • There was clear impact from strikes and some signs of storm disruption although we think some are overstating just how much of an impact the latter had (but will only have a better idea in the state-level details released on Nov 19). 
  • Importantly, there were also some heavy downward revisions that clearly can’t be linked to hurricane or strike disruption, and leave September strength as more of anomaly at this stage. 
  • There are however some real data concerns that mean the report needs to be taken with a pinch of salt, including an exceptionally low initial response rate and a particularly favorable seasonal factor in October after a large revision to the September seasonal factor.
  • The unemployment rate perhaps offers the cleanest read here, rising from 4.05% to 4.15% but off the 4.25% seen in July that had helped drive the 50bp cut from the Fed in September. It also sees scope for a downward revision to the median FOMC forecast of 4.4% for 4Q24.
  • The bottom line is that the Fed is in cutting mode and when the data is mixed, they will continue on the course set out in September, through the balance of the year at least. That argues for two 25bp cuts. 

PLEASE FIND THE FULL REPORT ATTACHED HERE: USEmploymentReportNov2024.pdf

Keep reading...Show less