US Jobs Report Much Stronger Than Anticipated

Alan Penny

1 November 2019

2 min read

dollar notes under US flag

  • Jobs report shows strength in United States
  • Upward revisions for previous months
  • Market reaction positive

The US jobs report came out much more positive than anticipated on Friday. There were several different metrics that the report measures, with almost all of them blowing the estimates out of the water. With this, the initial reaction has been very strong for US equities, and the US dollar has strengthened a bit as well. This would be what you would expect, and as a result all seems to be well in the United States.

The numbers

The numbers for the report were good all-around with one minor exception. The Average Hourly Earnings month over month figure came in at 0.2%, instead of 0.3% as anticipated. This is a slight miss, but it is something to pay attention to.

If the hourly earnings don’t increase at a decent clip, this can weigh against overall inflationary pressure, which can be poor for the currency of the economy. That being said, it is not something to be overly concerned about at this point in time.

the market looks very likely to celebrate this number, and the market should continue to be pushed to the upside

Non-Farm Employment Change figures came in at an addition of 128,000 jobs for the month of October much better than the anticipated 90,000 jobs. Beyond that, the September number was revised upward from 136,000 jobs added to 180,000.

All around, the US job market still looks very strong, even though the job market is relatively tight. At this point, the market looks very likely to celebrate this number, and the market should continue to be pushed to the upside, be it stocks or commodities that are sensitive to the overall economy, such as crude oil.

The Unemployment Rate came in at 3.6%, which is historically low and as expected. This is a good sign because the trading community will pay quite a bit of attention to this number, as it is the one that the general public tends to focus on the most as well.

Historically, US consumers step away from spending when they worry about unemployment due to this figure. Obviously, this is a major problem for the US economy, as consumption is 70% of GDP.

The main take away

The main take away of this report is that the US market should continue to be very strong due to the fact that employment, and therefore the overall economy, should continue to be very powerful. With that being the case, the market will continue to see flow into the United States stock markets from overseas, which should continue to put upward pressure on the US dollar as well.

Commodities should see a bit of a boost, especially those involving highly sensitive markets such as natural gas and petroleum. Bonds will probably suffer a bit at this point, but it looks like markets will turn around and go “risk-on” going forward.

Written By
Alan Penny

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