The US non-farm payrolls data came in significantly stronger than expected which indicates strong US economy
The US non-farm payrolls data came in significantly stronger than expected, with a gain of over 250,000 jobs. This is the highest reading since May, and the unemployment rate decreased the second time in a row.
Key takeaways from today's report include:
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Open account Try demo Download mobile app Download mobile app- Non-farm payrolls rose by 254,000, far exceeding Bloomberg consensus estimates.
- Previous months' data was revised upwards, showing a stronger labor market than initially thought.
- The unemployment rate fell to 4.1%, a crucial metric derived from the household survey.
- Wage growth accelerated to 4.0% year-on-year, exceeding the Fed's target of 3.0% that is aligned with achieving its inflation goal within the forecast horizon.
This is the last before one jobs report ahead of the US election, with the next one scheduled for November 1st. The data underscores the ongoing strength of the US labor market, although growth rates have moderated compared to 2022 and 2023. Notably, the declining unemployment rate, now at a two-month low, indicates a robust labor market from both the employer and employee perspectives.
The 4.0% year-on-year wage growth marks the third consecutive increase and could signal sustained demand for labor. Higher wages may also contribute to elevated core inflation, potentially delaying interest rate cuts.
Higher salary increase indicate that core inflation may be more sticky. Source: Bloomberg FInance LP, XTB
The probability of a 50 basis point rate cut at the November Federal Open Market Committee meeting has decreased significantly. The market now assigns a 9% likelihood to such a move, down from 33% before the data.
Market is pricing only 9% probability of 50 pb cut in November. Source: Bloomberg FInance LP
Before the November Fed decision and the US election, we will receive September inflation data and the October non-farm payrolls report. However, the current data suggests the Fed is on track to avoid a US recession, leading to a strong rally in the S&P 500. The index is up nearly 1% today and is now just 0.5% below its all-time high.
US500 and the dollar is up after the great NFP figures from September. Data suggests that the economy is doing well and can stand higher interest rates for now. Source: xStation5
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