Lackluster September Employment Report
By Mel Fabrikant Tuesday, October 22, 2013, 03:59 PM EDT
Nonfarm payrolls rose 148k in September falling short of the median consensus on Bloomberg of 180k but right on par with Sterne Agee's forecast of 150k. July NFP was revised down slightly while the August report was revised slightly higher resulting in a net revision of +9k. Nonfarm Payrolls The unemployment rate declined one-tenth to 7.2% (7.278 to 7.235) as did the augmented unemployment rate which dropped from 10.9 to 10.8%. The average workweek remained unchanged at 34.5 and average hourly earnings rose 0.1%.
In the details: Private payrolls rose 126k in September with a 2k gain in manufacturing payrolls and 20k in construction. Service payrolls rose 100k thanks to a 21k rise in retail trade, +32k in business services and +20k in temp NFP. The labor force declined slightly, as did the pool of available labor resulting in no change to the participation rate at 63.2%, the lowest level in decades. Bottom line: After weeks of delay, the September NFP report doesn't pack the usual punch as the market was forced to already price in a monthly assessment of labor conditions from other ancillary reports including jobless claims, ADP, and the Fed's Beige Book which all seemed to collaborate on the theme of "more of the same." With just days to go, most focus has already shifted to the October NFP report set to be released November 8th. From the Fed's standpoint, this morning's report reaffirms their position to hold monthly asset purchases steady at $85bn a month and essentially takes tapering off the table for October and likely December as well. As we have noted before Bernanke opened the door for tapering to be a 2014 event in the press conference following the September FOMC statement release when he said even if we begin to taper this year, each subsequent move will be data dependent. The Fed is still waiting to see noticeable improvement in hiring and it appears they are going to be waiting even longer.
Lindsey M. Piegza Managing Director, Chief Economist Sterne Agee