Treasury prices are lower across the curve following the release of the September jobs report, with the 10-year note yield approaching 2.40% for the first time since early July.  Most Asian equity markets posted modest gains overnight, but European markets and S&P 500 futures are slightly lower at the moment.

Nonfarm payrolls shed 33,000 jobs in September, the first negative print since September 2010.  Market participants were expecting a noisy number due to the recent hurricanes, so there’s no negative reaction to the headline jobs number. However, there is a more positive reaction to the wage growth data and the household employment survey. Regarding the former, average hourly earnings rose 0.5% in September (0.3% expected), and the prior month’s rate was revised higher to 0.2%. On a year-over-year basis, wages were up 2.9% (2.6% expected), which is the highest annual pace since June 2009.  For the household survey, the headline unemployment rate fell 20 bps to 4.2%, the lowest since January 2001. The headline rate was pushed lower by a 906,000 increase in household employment, which outpaced a fairly significant increase in the official labor force (+575,000). As such, the labor participation rate bounced higher to a 3.5 year high of 63.1%.

The Labor Department noted that Hurricane Harvey and Irma had a notable impact on estimates of total nonfarm payrolls, but it also said there was “no discernible effect” on the household survey (different calculation methodologies). Hence, the immediate market reaction is more focused on the household survey data, which was very positive. The strong wage growth is also well received, but it’s worth noting that this data comes from the same establishment survey that produces nonfarm payrolls. In other words, was the wage data also impacted by the hurricanes?

Jason Haley
Managing Director, Investment Management Group

Date Event   Survey Actual Prior Revised
10/6/2017 Change in Nonfarm Payrolls Sep 80k -33k 156k 169k
10/6/2017 Two-Month Payroll Net Revision Sep -38k
10/6/2017 Change in Private Payrolls Sep 75k -40k 165k 164k
10/6/2017 Change in Manufact. Payrolls Sep 10k -1k 36k 41k
10/6/2017 Unemployment Rate Sep 4.40% 4.20% 4.40%
10/6/2017 Average Hourly Earnings MoM Sep 0.30% 0.50% 0.10% 0.20%
10/6/2017 Average Hourly Earnings YoY Sep 2.60% 2.90% 2.50% 2.70%
10/6/2017 Average Weekly Hours All Employees Sep 34.4 34.4 34.4
10/6/2017 Labor Force Participation Rate Sep 62.90% 63.10% 62.90%
10/6/2017 Underemployment Rate Sep 8.30% 8.60%
10/6/2017 Wholesale Inventories MoM Aug F 1.00% 1.00%
10/6/2017 Wholesale Trade Sales MoM Aug 0.00% -0.10%
10/6/2017 Consumer Credit Aug $15.540b $18.499b
10/10/2017 NFIB Small Business Optimism Sep 105 105.3
10/11/2017 MBA Mortgage Applications 6-Oct -0.40%
10/11/2017 JOLTS Job Openings Aug 6170
10/11/2017 FOMC Meeting Minutes 20-Sep
10/12/2017 PPI Final Demand MoM Sep 0.40% 0.20%
10/12/2017 PPI Ex Food and Energy MoM Sep 0.20% 0.10%
10/12/2017 PPI Ex Food, Energy, Trade MoM Sep 0.20% 0.20%
10/12/2017 PPI Final Demand YoY Sep 2.60% 2.40%
10/12/2017 PPI Ex Food and Energy YoY Sep 2.10% 2.00%
10/12/2017 PPI Ex Food, Energy, Trade YoY Sep 1.90%
10/12/2017 Initial Jobless Claims 7-Oct 252k 260k
10/12/2017 Continuing Claims 30-Sep 1938k
10/12/2017 Bloomberg Consumer Comfort 8-Oct 49.9
10/12/2017 Monthly Budget Statement Sep $0.0b -$107.7b
10/13/2017 CPI MoM Sep 0.60% 0.40%
10/13/2017 CPI Ex Food and Energy MoM Sep 0.20% 0.20%
10/13/2017 CPI YoY Sep 2.30% 1.90%
10/13/2017 CPI Ex Food and Energy YoY Sep 1.80% 1.70%
10/13/2017 CPI Core Index SA Sep 253.1 252.54
10/13/2017 CPI Index NSA Sep 246.902 245.519
10/13/2017 Real Avg Weekly Earnings YoY Sep 0.90% 1.00%
10/13/2017 Retail Sales Advance MoM Sep 1.40% -0.20%
10/13/2017 Real Avg Hourly Earning YoY Sep 0.60% 0.70%
10/13/2017 Retail Sales Ex Auto MoM Sep 0.90% 0.20%
10/13/2017 Retail Sales Ex Auto and Gas Sep 0.40% -0.10%
10/13/2017 Retail Sales Control Group Sep 0.40% -0.20%
10/13/2017 U. of Mich. Sentiment Oct P 95.3 95.1
10/13/2017 U. of Mich. Current Conditions Oct P 111.7
10/13/2017 U. of Mich. Expectations Oct P 84.4
10/13/2017 U. of Mich. 1 Yr Inflation Oct P 2.70%
10/13/2017 U. of Mich. 5-10 Yr Inflation Oct P 2.50%
10/13/2017 Business Inventories Aug 0.40% 0.20%