Surprise, surprise! Despite the downbeat forecasts, the U.S. employment report turned frowns upside down as it printed better than expected figures. The non-farm payrolls figure landed at 103,000 for September, overshooting the consensus at 60,000 and allowing the jobless rate to hold steady at 9.1%.
But the good news doesn’t end there! The August NFP figure, which originally printed a big fat zero, was revised upwards to show a 57,000 increase in net hiring for the month. On top of that, the July payrolls figure also enjoyed an upward revision by 42,000. All in all, that amounts to almost a hundred thousand additional jobs for the past couple of months. Not too shabby, eh?
Components of the NFP report showed that the private sector added 137,000 jobs in August, which was more than enough to make up for the 34,000 layoffs in the public sector. Digging deeper into the numbers revealed that manufacturing companies actually shed 13,000 jobs while the services sector hired 85,000 more workers during the month.
Meanwhile, other employment figures also posted upbeat results. Average hourly earnings rose by 0.2% to $23.12 while the average work week climbed by six minutes to 34.3 hours. That means workers had a little extra moolah to earn and spend!
But before you transfer all your savings to your “iPhone 4S Apps Fund,” you’ll probably want to take a second look at the report. For one thing, the 103,000 figure is inflated by the return of the 45,000 Verizon employees who had been on strike in August.
If we discount the one-time increase, we’ll end up with a 3-month moving average of around 40,000 per month instead of the current 96,000 figure. And for many economists, this level is far from the employment conditions needed to ease the unemployment rate.
Based on the sharp rally in EUR/USD and other high-yielding currencies though, it looks like traders took the report as a good sign for the world’s largest economy. After all, the ISM manufacturing report released early last week already signaled that companies are still willing to hire, and the upside surprise in the NFP helped ease fears of the U.S. economy heading to a double-dip recession.
The NFP report might not have showed a gloom-and-doom number that markets were half-expecting, but investors would have to see more improvements in the employment sector if they are to be convinced that more stimulus is not necessary. For now though, after weeks of risk appetite taking a beating, we’ll take it.