Unemployment Rate Jumps To 3.7%

Key Insights

• The Non Farm Payrolls report easily beat analyst expectations. 
• However, the Unemployment Rate has suddenly increased from 3.5% to 3.7%.
• The increase in the Unemployment Rate provided support to riskier assets.

Non Farm Payrolls Report Exceeded Expectations

The U.S. has just released the ultra-important Non Farm Payrolls report, which indicated that the U.S. economy added 261,000 jobs in October. Analysts expected Non Farm Payrolls of 200,000.

From a big picture point of view, Non Farm Payrolls are slowly declining, but the economy adds jobs every month.

Unemployment Rate increased from 3.5% in September to 3.7% in October, compared to analyst consensus of 3.6%. It remains to be seen whether traders will focus on the increase in Unemployment Rate as the market usually pays more attention to the headline Non Farm Payrolls number.

Participation Rate declined from 62.3% to 62.2%. Participation Rate is declining for the second month in a row. However, it should be noted that Participation Rate has settled in a tight 62.1% – 62.4% range in 2022.

Rising Unemployment Rate Offsets Strong Non Farm Payrolls Data In The First Minutes Of Trading After The Reports

The strong Non Farm Payrolls report is bearish for riskier assets as it increases chances for a series of aggressive rate hikes from the Fed.

At the same time, the rising Unemployment Rate may provide some support to riskier assets as it shows that higher interest rates have finally put some pressure on the labor market.

Trading has been extremely volatile in the first minutes after the release of the job market reports. S&P 500 futures are jumping back and forth but remain in the positive territory, trading near the 3750 level.

The U.S. dollar found itself under some pressure against a broad basket of currencies. Currently, the U.S. Dollar Index is trying to settle below the 112.50 level.

Commodity markets do not show significant reaction to the reports as commodity traders stay focused on China, which may relax its zero-COVID policy.

Traders should take early market dynamics with a grain of salt as the situation may change throughout the day.

For a look at all of today’s economic events, check out our economic calendar.