US jobs report reaction: A little for everyone
|Today’s jobs report brought a little for everyone, with the initial optimism around the 119k beat soon cooling once taking other elements into account. Firstly, the good news. This figure stands well above the circa 50k expected by the markets, with particular strength in leisure & hospitality. We also saw construction job growth back in positive territory, gaining the most in any month since February. However, the downward revision to the August figure (-4k from 22k) should serve as a timely reminder of the potential fate for today’s welcome headline figure. We have seen the past eight initial NFP figures revised lower, with a particular nod to the May and June readings that saw 139k and 147k figures slashed to 19k and -13k respectively. With concerns about a potential downward revision to today’s figure, the rise in unemployment will remind many that concerns remain over the direction of travel. Nonetheless, an unemployment rate of 4.4% remains well below many of their Western peers, with the Canadians (7%) and eurozone (6.3%) in a very different position. Meanwhile, with the participation rate on the rise, this looks to be more a case of an uplift in the number of people seeking to re-enter the job market. The decline in the U6 total unemployment rate (8% from 8.1%) signals as much. As such, the positives of the report are not as good as they seem, but the inverse can be said about the negatives. From a market perspective, we have seen a somewhat mixed response, with dollar losses and gold gains soon losing traction. This report is unlikely to massively shift the needle for the December Fed meeting which looks like a pause according to the latest minutes and lack of October data. Nonetheless, as we draw a line under earnings season, the profit-taking seen in momentum trades such as US stocks and gold could ease to bring some optimism in time for Christmas.
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