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

DateEvent SurveyActualPriorRevised
10/6/2017Change in Nonfarm PayrollsSep80k-33k156k169k
10/6/2017Two-Month Payroll Net RevisionSep-38k
10/6/2017Change in Private PayrollsSep75k-40k165k164k
10/6/2017Change in Manufact. PayrollsSep10k-1k36k41k
10/6/2017Unemployment RateSep4.40%4.20%4.40%
10/6/2017Average Hourly Earnings MoMSep0.30%0.50%0.10%0.20%
10/6/2017Average Hourly Earnings YoYSep2.60%2.90%2.50%2.70%
10/6/2017Average Weekly Hours All EmployeesSep34.434.434.4
10/6/2017Labor Force Participation RateSep62.90%63.10%62.90%
10/6/2017Underemployment RateSep8.30%8.60%
10/6/2017Wholesale Inventories MoMAug F1.00%1.00%
10/6/2017Wholesale Trade Sales MoMAug0.00%-0.10%
10/6/2017Consumer CreditAug$15.540b$18.499b
10/10/2017NFIB Small Business OptimismSep105105.3
10/11/2017MBA Mortgage Applications6-Oct-0.40%
10/11/2017JOLTS Job OpeningsAug6170
10/11/2017FOMC Meeting Minutes20-Sep
10/12/2017PPI Final Demand MoMSep0.40%0.20%
10/12/2017PPI Ex Food and Energy MoMSep0.20%0.10%
10/12/2017PPI Ex Food, Energy, Trade MoMSep0.20%0.20%
10/12/2017PPI Final Demand YoYSep2.60%2.40%
10/12/2017PPI Ex Food and Energy YoYSep2.10%2.00%
10/12/2017PPI Ex Food, Energy, Trade YoYSep1.90%
10/12/2017Initial Jobless Claims7-Oct252k260k
10/12/2017Continuing Claims30-Sep1938k
10/12/2017Bloomberg Consumer Comfort8-Oct49.9
10/12/2017Monthly Budget StatementSep$0.0b-$107.7b
10/13/2017CPI MoMSep0.60%0.40%
10/13/2017CPI Ex Food and Energy MoMSep0.20%0.20%
10/13/2017CPI YoYSep2.30%1.90%
10/13/2017CPI Ex Food and Energy YoYSep1.80%1.70%
10/13/2017CPI Core Index SASep253.1252.54
10/13/2017CPI Index NSASep246.902245.519
10/13/2017Real Avg Weekly Earnings YoYSep0.90%1.00%
10/13/2017Retail Sales Advance MoMSep1.40%-0.20%
10/13/2017Real Avg Hourly Earning YoYSep0.60%0.70%
10/13/2017Retail Sales Ex Auto MoMSep0.90%0.20%
10/13/2017Retail Sales Ex Auto and GasSep0.40%-0.10%
10/13/2017Retail Sales Control GroupSep0.40%-0.20%
10/13/2017U. of Mich. SentimentOct P95.395.1
10/13/2017U. of Mich. Current ConditionsOct P111.7
10/13/2017U. of Mich. ExpectationsOct P84.4
10/13/2017U. of Mich. 1 Yr InflationOct P2.70%
10/13/2017U. of Mich. 5-10 Yr InflationOct P2.50%
10/13/2017Business InventoriesAug0.40%0.20%