Mixed Reports May Give Fed (More) Pause
The broadly disappointing September Employment Report continues the recent trend of mixed economic reports but overall suggests the economy continues to grow at a slow to moderate pace.
The September Employment report showed broad weakness, with the economy adding 142,000 jobs for the month; 118,000 were from the private sector. Prior months were revised lower by a combined 59,000 in July and August.
Weakness in the jobs data supports our view that overall inflationary pressures remain benign. The disappointing data and overall recent trend toward mixed economic reports may prompt the Fed to delay implementation of the first rate hike. The mixed data also support our expectation that the Fed will raise rates at a very gradual pace once policy tightening begins.
The data we received this morning shows increases in payrolls mostly from government and private services, particularly Professional & Business Services, Education & Health Care, Leisure & Hospitality, and retailing. Most goods-producing industries showed declines, with the exception of construction.
Wages were essentially flat for the month and held at a 2.2 percent rate over the past 12 months; hours worked fell 0.1 to 34.5 hours.
When hours are combined with payroll gains and wages, the index of aggregate hourly earnings, a proxy for take-home pay, fell 0.2 percent for September and slowed to a 4.5 percent rise over the past 12 months. The unemployment rate was unchanged at 5.1 percent and the participation rate fell to 62.4 percent.