US Jobs Report: What It Means for the Markets
The latest US jobs report showed that the labour market is losing momentum. In September, the US added just 29,000 non-farm jobs, significantly below economists’ expectations of around 90,000. The unemployment rate also increased from 4.1% to 4.2%. Previous figures were revised lower, with July and August employment reduced by a combined 60,000 jobs.
Another important figure was wage growth. Average hourly earnings increased by 0.1% in September, leaving annual wage growth at 3.0%. Slower wage growth can reduce inflationary pressure because businesses may face less pressure from rising labour costs.
For financial markets, the report is important because employment is one of the indicators considered by the Federal Reserve (Fed) when setting interest rates. A weaker labour market could reduce the need for further interest-rate increases. Following the report, expectations for an October rate hike decreased.
Lower interest-rate expectations can benefit stocks, particularly technology companies, because lower rates can make future corporate earnings more valuable. Bonds can also benefit from expectations of lower rates, while the US dollar may face downward pressure.
However, weaker employment is not entirely positive. It can also signal slower economic growth and weaker consumer spending. Therefore, investors will be watching upcoming inflation and economic data closely before deciding whether this report represents a temporary slowdown or a broader deterioration in the US economy.
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