254,000 jobs, despite the hurricanes
Weather distortion in payroll data
The September employment report delivered an astonishing, market-rattling surprise: non-farm payrolls surged by 254,000 jobs, while previous months were revised upward by 72,000 and the unemployment rate retreated to 4.1 per cent. The blowout print arrived despite expectations that regional hurricane disruptions would depress payroll numbers.
The Unstoppable Employment Engine
The sheer magnitude of the hiring gain demolished the prevailing thesis that the US economy was slipping into an imminent cyclical slowdown. Fixed-income markets reacted with violent duration selling, sharply paring back expectations of another aggressive 50-basis-point Federal Reserve rate cut. An economy generating over a quarter of a million jobs per month does not require emergency monetary stimulus.
September’s blockbuster employment gain eliminated any justification for panic rate cuts, forcing fixed-income investors to violently recalibrate the path of future monetary easing.