U.S. Non-farm Payroll Miss Expectations, but the Internals Show Strength

The U.S. non-farm payroll report showed an increase of 156K jobs in September compared to expectations of 174K, with most of the job losses coming from the government sector.  The 167K increase in private payrolls, reflect relatively strength and labor force also increased showing that people are coming back to work.

August’s non-farm payrolls were upwardly revised 167k gain from the prior 151k, though July’s 275k jump was revised down to 252k, generating a net loss of 7K jobs over the two-month period. The unemployment rate popped up to 5.0% from 4.9% previously. Household employment rose 354k from 97k, while the labor force surged 444k from 176k. The labor force participation rate inched up to 62.9% from 62.8%.   This data shows that people are going back to work, and the upward movement in the unemployment report was generated from an increase in participation.

Average hourly earnings rose 0.2% versus 0.1% in August. The workweek improved to 34.4 hours from 34.3 hours. Total private payrolls climbed 167k from 144k in August, and versus the 154k ADP September gain. The goods sector added 10k jobs, with construction up 23k, while manufacturing shed 13k. Service sector jobs rose 157k, paced by a 67k increase in business services employment. Government jobs fell 11k

Canadian Employment Surges in September

In a separate report, Canada employment surged 67.2k in September after the 26.2k bounce in August. The Canadian economy is approximately 10 times smaller than the U.S. economy which makes 67.2K a robust number. The increase easily outpaced expectations which was an increase of 10.0k. The unemployment rate was 7.0%, matching the 7.0% rate seen in August to come in on target in terms of expectations.

The ECB’s Vasiliauskas said that the central bank hasn’t discussed tapering. More confirmation that tapering of asset purchases isn’t on the table for now.  The underlying theory of the tapering comments were that asset purchases would end at a gradual pace rather than an abrupt end to the program, which already means that the QE program has to be extended beyond the current time frame, in one way or another. Vasiliauskas also said that Deutsche Bank doesn’t pose a systemic risk, a comment that has to be seen against the background of new bank bailout rules in Europe, which limit the possibility of direct government aid for banks in trouble.