Playing it cool: Weak jobs report dampens rate hike odds
SPY•The US added 29,000 jobs in September, versus a 90,000 consensus, and revisions cut earlier payrolls by a combined 60,000. Markets priced a 16.1% chance of a rate hike at the Fed’s October meeting, down from 26.0% before the report.
1. Payrolls miss expectations
The US economy added 29,000 jobs in September, less than one-third of the 90,000 expected. August payrolls were revised down 17.9% to 133,000, while July’s reported gain of 21,000 was restated as a loss of 10,000 jobs, a combined downgrade of 60,000.
2. Rate hike odds fall
Markets priced a 16.1% likelihood of a rate hike at the conclusion of the Fed’s October meeting, down from 26.0% just before the report and 64.2% a week earlier. Average hourly wages rose 0.1% in September, below the 0.3% consensus, and annual wage growth cooled to 3.0% from 3.1%.
3. Labor market details
The unemployment rate rose to 4.2% as labor force participation increased to 61.8% from 61.6%. Government payrolls fell by 17,000, while the jobless rate among Black workers rose one percentage point to 7.0%.
