September US non-farm payrolls fall short of expectations – again
The headline seemed so authoritative (“U.S. nonfarm payroll job growth seen pushing case for Fed hikes”) and coming from Reuters as well!
Unfortunately, notwithstanding coming off a weak August, September’s non-farm payroll additions of +156k (and +167k for the private sector) fell short of the +175k predicted from Reuters survey of economists. So does this now mean Yellen will now have to dial back the ‘leaks’ pushing for a December rate increase?
With average weekly earnings rising by only +2.3% pa for private sector workers and private sector employment growth of +1.9% driven by low paid and volatile service sector jobs, this is hardly the stuff of a rampant inflationary surge requiring a tighter monetary strategy. This however is not exactly a surprise as we pointed out a week previously with the fall in US state tax receipts. Non-farm payroll statistics are Bureau of Labor Statistics guestimates, while tax receipts reflect the more tangible reality of real incomes. If the Fed raises rates in December it will have little to do with the state of the US economy and more to do with politics and an attempt to pre-empt a broader currency crisis.
September job creation – more bartenders, waiters and social workers with mining and logging stabilising along with rig counts and oil prices.