Key jobs report likely delayed by the US shutdown

In focus today

• The US September Jobs Report scheduled for today will most likely not be released due to the government shutdown, which also affects the Bureau of Labor Statistics. The ISM Services Index for September will still be released.
• In Norway, we expect the September unemployment rate (s.a.) to remain at 2.1%, despite slowing employment growth and declining job vacancies signalling reduced labour demand. We will also look for new vacancies as a proxy for labour demand.
• In Sweden, we receive the services PMI, which has fluctuated throughout the year but recorded an increase in September. However, the employment subindex paints a concerning picture, aligning with the low number of new job openings in the services sector, as indicated by data from the Swedish Public Employment Service.
• In Japan, attention will be on the LDP-leadership election scheduled for Saturday. The ruling LDP currently operates as a fragile minority government, with little differentiation among the candidates so far. Key aspects to watch include their positions on fiscal stimulus and BoJ policies. If the new president calls for a snap parliament election, it could delay a potential BoJ rate hike in October. However, we consider it more likely that the LDP will avoid this scenario.

Economic and market news

What happened yesterday

In the euro area, the unemployment rate rose slightly to 6.3% in August from 6.2% in July, though the number of unemployed remained largely stable at 10.8 million, rising by just 10,000. France and Spain saw declines in unemployment, while Germany and Italy reported marginal increases. The unemployment rate has hovered around these levels over the past year, often subject to revisions, so we do not interpret this minor uptick as a sign of labour market weakness. While the euro area labour market is cooling with slower employment growth, we view this as a normalisation rather than an indication that additional stimulus is required to boost demand. 

In the US, the Challenger report revealed 56,064 job cuts in September. Although not typically a closely monitored release it has drawn attention due to uncertainty surrounding the September jobs report. The data showed a continued decline in layoff announcements compared to August, which is good news. However, firms' hiring plans have fallen sharply, weakening the optimism.

Equities: Equities extended their gains on Thursday, with European and Nordic markets outperforming the US. Semiconductor stocks led the gains, supported by positive news flow on faster expanded chip capacity. As such, investor preference shifted from software to hardware, driving strong moves in names such as Atlas Copco and ASML, which rose 4-5% compared to a more modest 1% gain for Nvidia in yesterday's session. Historically, the semiconductor cycle has been closely linked to inventory cycle, making this development a positive signal for the broader industrial recovery story. Meanwhile, pharmaceuticals paused after recent strength, alongside other defensive sectors such as consumer staples and telecoms. Futures point to modestly higher equities again this morning.

FI and FX: US yields were little changed across the curve yesterday. Both the 2-year and 10-year Treasury yields have declined around 10bp so far this week, leaving a 25bp Fed cut later this month fully priced. Today's release of the September payrolls report is likely to be delayed due to the government shutdown. In the euro area, moves were similarly contained, with Bund yields edging 1-2bp lower across the curve. The unemployment rate rose to 6.3% in August from 6.2% in July, against expectations for no change. EUR/USD traded remarkably steady throughout yesterday's session while NOK, SEK and GBP reversed yesterday's gains.