JAMIE COX, MANAGING PARTNER AT HARRIS FINANCIAL GROUP, RICHMOND, VIRGINIA: "This is a slider in the dirt for the Federal Reserve as it contemplates interest rates later this month. There are several board members who will swing (and miss) at this pitch to advocate for higher short terms rates. The data support a hold, not a hike."
BRAD CONGER, CHIEF INVESTMENT OFFICER, HIRTLE & CO., BRYN MAWR, PENNSYLVANIA:
“August non-farm payrolls were stronger than expected. The headline number affirms Chairman Warsh’s assertion that the FOMC does not need to worry about the employment side of the mandate. Monetary restraint should depress term premiums/breakevens and help long duration outperform.
"More interesting is the composition. If you squint, you might see the outlines of the AI displacement. Sectors with high AI adoption (information, financial) were weaker. Sectors that are building/equipping/powering data centers (construction, manufacturing, utilities) were stronger. That should support incomes in the lower leg of the K."
SAM STOVALL, CHIEF INVESTMENT STRATEGIST, CFRA RESEARCH, NEW YORK:
"The numbers ended up being more than three times what was expected and that certainly has added to the confusion of what the Fed will be doing, mainly because the Fed has told us that it wants to focus on inflation over payrolls. Now that payroll numbers are substantially higher, I think that that adds to the possibility that the Fed will be at least considering.
"The market has turned down because I think that indicates that investors are concerned that the Fed now has more ammunition to raise rates or at least less ammunition to keep rates steady.
"The real question is what happens to the market after next week's inflation data, because we really don't have any earnings left and the Fed meeting won't be until the week after. So the only thing that the market can focus on is the inflation data for next week."
GARY SCHLOSSBERG, GLOBAL STRATEGIST, WELLS FARGO INVESTMENT INSTITUTE, SAN FRANCISCO:
"We attributed some of the weakness in the job market to the productivity gains that we're beginning to see from the introduction, the absorption of artificial intelligence into the economy. But this report simply reinforces the view that the economy has had a good deal of momentum coming through the summer.
"With oil prices moving up, though, that does run the risk of squeezing household incomes a bit and slowing consumer spending, which hasn't been spectacular, but certainly supported.
"Today's report going into the meeting, I think certainly puts more pressure on the CPI to come in very friendly to avoid a rate increase by the Federal Reserve. I think if there are signs that in consumer prices inflation is moving up, that just reinforces the view that the Fed will be raising rates on September 16th."
JOSH STEVENS, CHIEF INVESTMENT OFFICER, CRESALTA INVESTMENT MANAGEMENT, GREENWOOD VILLAGE, COLORADO:
"This is obviously a very volatile report, but it does mean that at this point the Fed's focus is going to be on inflation.
"The stakes are going to stay high for the inflation data next week. The argument about the labor market remaining weak has some validity, but if employment shows strength in next few months, we’d see a pickup in wages, and that would get the Fed’s attention.
"This shows a positive direction for the overall economy. Things got a little bit disjointed with the Iran war but it does seem like some of the momentum we saw in the beginning of the year is back."
CHRISTOPHER HODGE, CHIEF U.S. ECONOMIST, NATIXIS, NEW YORK:
"Even after July’s report, most policymakers seemed sanguine about the labor market so inflation will clearly still be the primary driver of near-term policy. A softer print today could have given some wiggle room on what was considered to the an acceptable core CPI print, but clearly we didn’t get that. Instead, the onus will continue to be on the doves to get a disinflationary print that justifies another hold – we are putting that bogey at about 20bps. Absent that, the Fed will likely hike in September."
TIM URBANOWICZ, CHIEF INVESTMENT STRATEGIST, INNOVATOR ETFS, GOLDMAN SACHS ASSET MANAGEMENT, NEW YORK:
"Today’s report was strong, and we could see markets take a react first, ask questions later approach. but once the dust settles, we think investors will realize the broader trend of labor market rebalancing is still intact.”
PETER CARDILLO, CHIEF MARKET ECONOMIST, SPARTAN CAPITAL SECURITIES, NEW YORK:
“This is a strong report considering market consensus, and a strong rebound from the previous month. Hourly wages, not a problem. That's actually positive here.
“It shows that the labor market is solid. There's no evidence here of rising wage inflation, even though they're a little bit higher than expected on a yearly basis, but 3.1% is more or less what we've had for a sustained period of time. So I don't think this will be a problem for the Fed, and certainly it shows that the jobs market is in solid condition.
“Remember next week we have the CPI and PPI and I expect them to more or less be a repeat of what we saw in July and August. And if that's the case, I think that the Fed stays on hold. (Fed Chair) Kevin Warsh certainly talked a tough talk on inflation, but he's in no real hurry to raise rates, and I think he's going to hold out.”
BRIAN JACOBSEN, CHIEF ECONOMIC STRATEGIST, ANNEX WEALTH MANAGEMENT, MENOMONEE FALLS, WISCONSIN:
"The drop in employment in July was an illusion. That’s the problem with trying to trade the headlines. Data get revised. The drop in local education was a seasonal adjustment illusion.
"The index for aggregate hours and aggregate earnings both advanced nicely.
"The labor force participation rate improved, but it’s hard to believe the labor force increased by 683,000 in August. The BLS has some soul searching to do when it comes to seasonal adjustments.
"If there’s a cloud behind the silver lining of the report, it’s that the number of people who have been unemployed for 27 weeks and over increased by 159,000. A “no-hire, no-fire” situation is OK for those with jobs, but tough for those without."
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