Article Attachment

The attached file contains this articles commentary as well as tables and charts of the data.
Download Attachment

Employment: Solid Gains Will Keep Fed Hiking

October 7, 2022
Bottom Line: Job gains were slightly stronger than expected in September, despite seasonal adjustments that pushed down the reported level of retail trade and teaching jobs. Leisure and hospitality led the job gains, while the healthcare sector also saw robust gains. The unemployment rate dropped two-tenths to 3.5%, well below expectations as the labor force surprisingly declined. Finally, average hourly earnings rose another 0.3% on the month, mostly as expected and continuing the trend of solid wage gains.
Overall, this was a solid labor report, and the trend rate of job growth is decelerating only very slightly. Given the Fed's focus on the strength of the labor market as a critical factor behind sustained inflation, this report will likely be fodder for the hawks that they need to do more to fight inflation. Expect markets to continue to price for another 75bp hike in November and increase the odds that they go at least 50, possibly 75, in December.
Payroll Employment
rose by 263k in September, compared with market expectations for an increase of 265k. The prior 2 months were revised, slightly higher in August and higher in July by 11k.
  • Government jobs FELL by 25k.
  • Private sector jobs ROSE by 288k.  
  • Private education jobs rose by 14k. State and Local education jobs fell by -29k. 
Overall employment is now 3.9% ABOVE its year-ago level,  Over the past 12 months, 5,690k jobs have been created. In September, the job gains were in:
  • Trade, Transportation & Utilities (+4k with -1k of those in Retail Trade)
  • Professional & Business Services (+46k with the addition of 27.2k in Temp Help Services)
  • Leisure & Hospitality (+83k)
  • Education & Health Services (+75k)
  • Manufacturing (+22k)
  • Construction (+19k)
  • Other Services (+17k), and
  • Information (+13k).
Jobs were shed in Financial Activities (-8k), and Government (-25k).
The Index of Aggregate Hours ROSE by 0.2%, combining the solid gain in private payroll employment and the steady workweek.
Hourly Earnings ROSE by 0.3% in September, below market expectations of 0.4%. Hourly earnings are now 5.0% ABOVE their year-ago level.
Weekly Earnings
also ROSE by 0.3%, the result of the change in hourly earnings and a steady workweek. Weekly earnings are now 4.1% ABOVE their year-ago level.
The Average Workweek was UNCHANGED at 34.5 hours, BELOW the market consensus of 34.7 hours.
Article by Contingent Macro