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US LABOR MARKET: Seasonality An Issue For Fed Interpretation Of Sept NFPs (2/2)

US LABOR MARKET
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  • Outsized September Seasonal Adjustment To Establishment Survey: The second key oddity in September's report was that the seasonal adjustment for the September establishment survey was the smallest (i.e. a factor closest to 1, or most favorable) for the month of September going back decades. NSA payrolls rose by 460k, reducing to 254k when adjusted.
  • If the BLS had re-used 2023's September seasonal adjustment factor, payrolls would have come out at 145k basically right on the consensus estimate - and not 254k.
Source: BLS, MNI
  • Fed Seems Aware Of Seasonal Issues: in yesterday's FT interview, NY Fed President Williams said in response to the question "Is it your expectation that the pace we saw in September is probably not going to continue going forward?" :
    • "JW: Any specific month is going to have some random variation for various reasons, and it could be some seasonal factors or other factors."
  • In other words these issues with the September payrolls report are on the FOMC's radar, in addition to the downwardly revisionist interpretations of this year's establishment surveys after the QCEW preliminary re-benchmarking (which Powell noted meant payroll report numbers "may be artificially high").
  • That helps square up why FOMC participants across the Hawk-Dove spectrum have sounded totally unfazed by September's payrolls report as they head to the November meeting. While it took the steam out of calls for a 50bp cut - particularly given the upward revisions - it doesn't appear to be seen as an impediment to cutting again in November.
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  • Outsized September Seasonal Adjustment To Establishment Survey: The second key oddity in September's report was that the seasonal adjustment for the September establishment survey was the smallest (i.e. a factor closest to 1, or most favorable) for the month of September going back decades. NSA payrolls rose by 460k, reducing to 254k when adjusted.
  • If the BLS had re-used 2023's September seasonal adjustment factor, payrolls would have come out at 145k basically right on the consensus estimate - and not 254k.
Source: BLS, MNI
  • Fed Seems Aware Of Seasonal Issues: in yesterday's FT interview, NY Fed President Williams said in response to the question "Is it your expectation that the pace we saw in September is probably not going to continue going forward?" :
    • "JW: Any specific month is going to have some random variation for various reasons, and it could be some seasonal factors or other factors."
  • In other words these issues with the September payrolls report are on the FOMC's radar, in addition to the downwardly revisionist interpretations of this year's establishment surveys after the QCEW preliminary re-benchmarking (which Powell noted meant payroll report numbers "may be artificially high").
  • That helps square up why FOMC participants across the Hawk-Dove spectrum have sounded totally unfazed by September's payrolls report as they head to the November meeting. While it took the steam out of calls for a 50bp cut - particularly given the upward revisions - it doesn't appear to be seen as an impediment to cutting again in November.