US LABOR MARKET
The September Employment report effectively priced out a 50bp Fed cut in November, with stronger-than-expected job gains and an unexpectedly low unemployment rate suggesting little need to follow-up with a second consecutive half-point cut. But there were some oddities in the report that bear re-examination, particularly in light of potential revisions in future months - including the Nov 1 release of October's report, less than a week before the Fed decision.
- Government Jobs Blowout In Household Survey: The biggest question mark came from the extremely strong government job gains in the household report (which determines the unemployment rate): roughly 1.3M on a NSA basis, and 785k on a seasonally adjusted basis. Each series including the total are seasonally adjusted individually and don’t sum but it nevertheless broadly points to a much weaker month beyond government hiring considering total household employment increased by 430k. Some of the larger categories saw employment for private salaried workers increasing a modest 133k after two monthly declines whilst self-employed fell by 240k. September is usually a strong month for hiring (with schools back in session), as reflected by the lower SA figure vs NSA, but the non-seasonally adjusted gains last month blew away every previous year and by far more so than can be explained by the relatively soft August (see chart).
This was not replicated in the establishment survey where government payrolls gains appeared normal vs previous Septembers.
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