Hot off the presses, we have the September employment report, which showed 156,000 jobs were created during the month vs. the expected 168,000-170,000 jobs and 167,000 in August (which was revised up vs. the original reading of 151,000). We'd note the September figure was below the year-to-date average of 178,000 jobs per month.
From a stock market perspective, the report was likely to be baby-bearish in that it was the right combination of data that showed continued job gains with more people working, but not oh-so-much to scare the market into thinking a December Fed rate hike was now a foregone conclusion.
Digging into the particulars, we see wages are up 2.6% year over year, hours worked ticked up vs. August but remain down compared to a year ago and more people are working with job gains in lower wage categories (retail, hospitality, healthcare) continuing. We'd also note the month-over-month step up in professional and business services jobs was primarily due to the rebound in temporary jobs. On a positive note, the labor force participation rate, a gauge closely watched by the Fed, rose to 62.9% in September from 62.8% in August and 62.4% in September 2015. All in all, a good report with room for improvement.
As we like to say, it takes more than one data point to make a trend and based on the September employment report the market is apt to need far more numbers to decide if the Fed will indeed boost rates come December. As such, we should see another reprieve at least in the short-term higher-dividend-yielding stocks. Looking past that, we are likely to see all key data pertaining to the speed of the economy and inflation put through the wringer between now and the December meeting, which could give rise to greater market volatility data point to data point.
The fun will continue next week, given the influence of consumer spending on the economy and the Fed's mandate on inflation when we get the September retail sales and producer price Index reports.