5 Takeaways from the September NFP Release

Bummer! The September non-farm payrolls report doused hopes of a Fed taper this year, as the actual figure fell short of expectations and printed a mere 148K increase in employment. What does this mean for the U.S. economy, Greenback, and Fed monetary policy? Let’s take a closer look at the numbers to find out!

1. Hiring is still very weak.

Like Shakira’s hips, the numbers don’t lie. The September jobs release painted a very bleak picture of the U.S. labor situation, as the report failed to meet expectations for the third month in a row. Private employment picked up by 126K, lower than the estimate of a 180K increase, while government hiring rose by 22K.

2. Bernanke is not pleased.

Tsk, tsk, tsk. It looks like Fed head honcho Bernanke is not too happy about the recent downturn in hiring, as this suggests that the central bank’s aggressive easing measures are still not doing enough to spur hiring. “Conditions in the job market today are still far from what all of us would like to see,” remarked Big Ben in a recent press conference.

3. Revisions, revisions, revisions.

A closer look at the recent figures would reveal that there were some revisions made in the previous months’ data. In particular, the August figure was revised up from 169K to 193K while the July figure was revised down by 15K. Summing it all up, the net jobs growth in Q3 2013 was still the weakest quarterly increase since August 2012.

4. Jobless rate down to 7.2%.

Perhaps the only bright spot in the September NFP release was the drop in the unemployment rate from 7.3% to 7.2%, which brings the indicator a step closer to the Fed’s 6.5% target. Similar to past jobless rate declines though, this “improvement” was mostly a result of a lower participation rate, which means that more people are dropping out of the labor force and giving up on their jobs search.

5. No taper for 2013?

All bets are off! For an “Octaper” at least. Several economists have predicted that a September jobs figure below 150K would be enough to assume that the Fed won’t be tapering bond purchases at all this year. With that, market participants seem to be convinced that the earliest possible taper would take place in March 2014.

Bear in mind that the October jobs data is likely to be weighed down by the recent government shutdown, which resulted to several employees being furloughed and average earnings being reduced. Aside from that, the release date will be pushed back a week later from the original November 1 schedule to November 8, in order to give time for the number crunchers at the Bureau of Labor and Statistics to catch up with the piling paperwork.