US Jobs Report Comes Out Solid

Chris Lewis
Chris Lewis

4 October 2019

USD forex trading

  • Slight miss but still constructive
  • Lowest unemployment rate since 1969
  • US consumer likely to continue supporting global economy

The Non-Farm Employment Change figures came out for the month of September on Friday, with an addition of 136,000 jobs in the United States. The number was slightly lower than the expected at the 145,000 figure, but the market has still seen this as a relatively solid and stable announcement. Beyond that, the Unemployment Rate came in at 3.5%, which is an extraordinarily low figure for the United States. In fact, it’s the lowest rate the US has had since 1969. Beyond that, the revisions to previous months were all positive.

The Average Hourly Earnings month-over-month came out flat, which is less than the 0.3% that was expected. It is the one sticking point to the announcement, but it is enough to keep traders relatively satiated when it comes to the outlook for the US economy. After all, the US consumer has lifted the global economy for some time, and it looks as if they will continue to do so.

Market reaction

The market reaction to the jobs figure can be seen on multiple fronts. The US dollar has rallied against the Japanese yen, which is typically a risk barometer. In fact, the recovery has been quite nice, and it looks as if the pair is going to try to consolidate on the longer-term time frame, as opposed to breaking down like it seemed to want to do just 24 hours ago.

Gold markets have pulled back before bouncing again, but gold is in its own world as there are a lot of geopolitical issues pushing it around. Beyond that, the US dollar has strengthened slightly against the euro, which is a good sign for US equities and US treasuries. That market tends to be a little distorted compared to typical behavior. Negative yields in the European Union are seeing money leaving that continent anyway.

gold is in its own world as there are a lot of geopolitical issues pushing it around

Stock markets look like they are more than likely continuing to go higher, although in a somewhat limited manner. There are a whole host of major issues going on right now that have been affecting the S&P 500, the Dow Jones Industrial Average, and other indices in the US. However, the jobs situation doesn’t seem to be a concern, at least for the next month. This could end up being yet another reason for the S&P 500 to rally into earnings season if CEOs deliver decent forward guidance.

Looking ahead

At this point, one of the major hurdles for the market has just been cleared as the ISM Non-Manufacturing PMI figures spooked the market  just as the ISM Manufacturing PMI figures did before that. It looks as if the markets will continue to chug ahead overall, continuing the trend that we have seen for some time for most of these assets. Now that the jobs number is out of the way, markets will start to look towards October 10 and 11, when the Chinese come to DC for talks.

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