Tag: Non-farm payroll

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U.S. economy added just 12,000 jobs in October 2024

U.S. workers

In October 2024, non-farm payrolls saw an increase of 12,000, a significant drop from September’s figures and falling short of the 100,000 predicted

The unemployment rate remained steady at 4.1%, meeting expectations.

The rate of job growth in October 2024 was the slowest since the end of 2020, hindered by the effects of storms in the and a considerable labour standoff (strike action), which impacted the overall employment picture.

According to the Bureau of Labor Statistics‘ Friday report, the modest increase in nonfarm payrolls for October, which was already anticipated to be subdued, marked the smallest rise since December 2020.

U.S. monthly job creation

U.S. monthly job creation
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U.S. non-farm payrolls surged by 254,000 in September 2024

U.S. non-farm payroll data

In September 2024, the U.S. economy saw a significant increase in job additions, substantially surpassing expectations and contributing to a robust employment landscape as the unemployment rate declined, according to the U.S. Labor Department’s report issues Friday 4th October 2024.

U.S. Non-farm payroll numbers rose by 254,000 in September 2024, a jump from the revised figure of 159,000 in August and exceeding the forecast of 150,000.

The unemployment rate dropped to 4.1%, a decrease of 0.1 percentage point, while the household employment survey reported a substantial increase of 430,000 jobs.

Average hourly earnings grew by 0.4% for the month and saw a 4% rise compared to the previous year, outpacing the projected estimates.

U.S. Bureau of Labor Statistics

U.S. Bureau of Labor Statistics
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U.S. stock markets rise after days of turmoil

Stocks up

U.S. shares gained on Tuesday 6th August 2024, signalling a tentative stabilisation in global markets after a period of significant declines.

The Nasdaq, known for its tech-centric portfolio, along with the Dow Jones Industrial Average and the S&P 500, all ended the day in more positive territory.

This ‘lift’ came after a period of muted activity in UK and European markets, with London’s FTSE 100 experiencing an initial surge before retreating.

In Japan, the Nikkei 225 stock index recorded a substantial rise of 10.2%, or 3217 points, marking its largest single-day point increase following a steep drop the day before.

The recent turmoil in the stock market was triggered on Friday 2nd August 2024 by unsatisfactory U.S. job data for July 2024, which indicated an increase in unemployment, raising alarms over a potential recession.

Additionally, there has been growing apprehension that stocks of major technology firms, especially those with significant investments in artificial intelligence (AI), may have been excessively valued, leading to challenges for some of these companies.

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U.S. non-farm payroll job growth comes in at 114,000 in July 2024, much less than expected, as unemployment rate rises to 4.3%

Workers

In July 2024, U.S. job growth decelerated more than anticipated, and the unemployment rate increased slightly, according to a report from the Labor Department on Friday.

Non-farm payrolls expanded by only 114,000 for the month, a decrease from June’s downwardly revised figure of 179,000 and falling short of the Dow Jones prediction of 185,000. The unemployment rate rose to 4.3%, marking the highest level since October 2021.

Average hourly earnings, an indicator of inflation, rose by 0.2% for the month and were up 3.6% from 2023, both measures not meeting the increases of 0.3% and 3.7% expected.

Following the release of the report, stock market futures extended their losses, and Treasury yields saw a significant drop.

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S&P 500 and Nasdaq hit record highs again as job data raises chance of a Fed interest rate cut

U.S. market record highs

Markets respond positively to job data as the S&P 500 and Nasdaq break record highs, again!

S&P 500 record high

S&P 500 record high Friday 5th July 2024

Nasdaq Composite record high

Nasdaq Composite record high

Nasdaq 100 record high

Nasdaq 100 record high

U.S. non-farm payrolls increase

The U.S. economy added slightly more jobs than expected in June 2024 though the unemployment rate increased, the U.S. Labor Department reported Friday.

Non-farm payrolls increased by 206,000 for the month, better than the 200,000 Dow Jones forecast though less than the downwardly revised gain of 218,000 in May, which was cut sharply from the initial estimate of 272,000.

The unemployment rate unexpectedly rose to 4.1%, matching the peak since October 2021, presenting a conundrum for Federal Reserve officials as they consider their next steps in monetary policy. Projections had indicated that the unemployment rate would remain stable at 4%.

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U.S. job gains reached 272,000 in May 2024 – exceeding expectations of 190,000

U.S. jobs

The U.S. economy exceeded job growth expectations in May 2024, alleviating concerns of a labour market downturn but potentially diminishing the Federal Reserve’s motivation to cut interest rates.

Non-farm payrolls surged by 272,000 for the month – a significant increase from April’s 165,000 and surpassing the consensus forecast of 190,000.

Concurrently, the unemployment rate increased to 4%, marking the first instance it has reached this level since January 2022.

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Bad economic news can be good for stocks

Bad news and good news

Bad economic news appears to have had an interesting impact on the stock market recently.

Traditionally, negative economic data might be anticipated to result in falling stock prices; however, recent trends have diverged from this norm.

News trend

In the past two months, negative economic news has had a paradoxically positive effect on equities. Investors have responded well to poor economic indicators, partly due to the belief that these could lead the Federal Reserve to begin reducing interest rates.

Dollar and the stock market

In recent times, the S&P 500, a large-cap equity index, and the U.S. dollar have exhibited a nearly perfect correlation. As the dollar has seen a gradual decline, the stock market has conversely experienced a rise. Typically, investors flock to the security of cash, and consequently the dollar, in times of uncertainty, yet they also channel investments into stocks upon the arrival of favourable news.

Economic data

Despite the upbeat trend in the stock market, real economic data has frequently fallen short of Wall Street’s predictions. The Citi Economic Surprise Index, a gauge that compares data to expectations, has been on a downward trajectory. This suggests that expectations have been surpassing the actual economic conditions, signalling that the economic situation may not be as favorable as previously thought.

Dilemma for the Fed

The Federal Reserve methodically reviews economic indicators to influence their interest rate decisions. Typically, unfavorable economic reports might prompt the Fed to reduce rates, unless there’s an uptick in inflation. Escalating inflation generally nudges the Fed towards a tighter monetary policy.

Monthly data roll-out

Data concerning the U.S. labour market presented to the Fed and markets may create that ‘pivotal’ moment – it often does – markets move of Fed comments and ‘awaited’ news. Reports detailing job openings, private sector job creation, and the Bureau of Labour Statistics’ nonfarm payrolls will shed light on the economy’s condition.

If job growth remains within the ‘Goldilocks range’ (neither too strong nor too weak), it may preserve the fragile equilibrium where unfavourable economic news has paradoxically favoured stock prices, while preventing excessive gloom.

Conclusion

To summarize, although adverse economic news has lately been advantageous for stock markets, monitoring this precarious balance is crucial. Excessive pessimism could be a harbinger of impending difficulties, despite its current benefits.

Note about Citigroup Economic Surprise Index

The Citigroup Economic Surprise Index is the sum of the difference between the actual value of various economic data and their consensus forecast. If the index is greater than zero, it means that the overall economic performance is generally better than expected, and the S&P 500 has a high probability of strengthening, and vice versa.

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U.S. job growth totalled 175000 in April 2024 – less than expected

Non-farm payroll U.S.

Non-farm payrolls rose by 175,000 in the month, falling short of the consensus estimate of 240,000.

The unemployment rate increased slightly to 3.9%, contrary to expectations that it would remain at 3.8%. Additionally, a broader measure of unemployment rose to 7.4%, marking the highest rate since November 2021.

In line with recent patterns, the health care sector led job gains with an increase of 56,000. Notable growth was also seen in social assistance (31,000), transportation and warehousing (22,000), and retail (20,000).

In response to the job data update, market traders now anticipate a strong chance of two interest rate reductions by the end of 2024.

Stock markets jumped higher on the news.

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Does the U.S. jobs boom raise doubts about rate cuts?

U.S. job creation vs inflation and interest rates

The U.S. economy is on a rip, with employers adding around 303,000 jobs in March 2024 – the largest increase in almost a year.

As the world’s largest economy continues to surge, questions arise about the Federal Reserve’s next move regarding interest rates.

Stronger-than-expected Job Growth

The unemployment rate fell to 3.8%, indicating strong job growth in several sectors such as health care, construction, and government. While economists had predicted job gains of approximately 200,000, the actual numbers have easily exceeded those expectations.

The labour market’s surprising resilience has caught analysts off guard, leading to speculation about the timing of interest rate cuts.

Fed’s Dilemma

The Federal Reserve has held interest rates in a range of 5.25%-5.5%, the highest level in over two decades. Initially, the Fed raised rates sharply in 2022 to curb inflationary pressures. However, the subsequent cooling of price inflation (down to 3.2% in February) without a significant spike in unemployment has complicated matters. The central bank now faces a delicate balancing act.

Delayed Rate Cuts?

The significant increase of 303,000 in non-farm payrolls for March 2024 reinforces the Federal Reserve’s stance that the robustness of the economy permits a gradual approach to interest rate reductions.

The Fed had been expected to initiate rate cuts this year to mitigate the impact of high borrowing costs. However, the stronger-than-anticipated economic performance suggests that rate cuts may not occur until the second half of this year.

Labour Market Dynamics

U.S. government spending in areas like high-tech manufacturing and infrastructure has bolstered the labor market. Additionally, an influx of more than three million immigrants last year has expanded the workforce, potentially keeping wage pressures in check. In March, average hourly pay rose by 4.1% year-on-year, consistent with expectations and near a three-year low.

America’s Comeback

President Joe Biden hailed the latest job figures as a “milestone in America’s comeback.” However, some market analysts argue that the strong jobs growth could complicate efforts to return inflation to the Fed’s 2% target. Some analysts even speculate that rate cuts may not materialize until 2025.

Global Implications

Higher U.S. interest rates have ripple effects worldwide, enticing investors to shift capital toward America. While the Fed’s in-tray still has some warnings, the delay in rate cuts reflects the economy’s underlying strength.

The U.S. jobs boom presents a conundrum for policymakers. Balancing economic vitality with inflation control remains a delicate task, and the Fed’s decisions will reverberate far beyond its borders.

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U.S. payrolls increased by 216,000 in December, better than predicted

Work

The U.S. labour market accumulated strong gains as the pace of hiring was greater than expected, dampening the chance of an early rate cut.

December’s jobs report showed that 216,000 jobs were added for the month while the unemployment rate remained steady at 3.7%. Estimates were in the region of 170,000 as analysts were looking for their ‘goldilocks figure.

Job boost from U.S. government

The hiring boost came from a gain of 52,000 in government jobs and another 38,000 in health care-related occupations.

Average hourly earnings rose 0.4% on the month and were up 4.1% from the same period 2023, both higher than the respective estimates for 0.3% and 3.9%.

U.S. unemployment chart Jan 2021 – December 2023

S&P500 and Nasdaq

The S&P500 and Nasdaq recovered some early 2024 losses as the fresh data encouraged the debate and chance of a rate cut again. Later however, the strong U.S. jobs growth dampened the likelihood of rate a cut anytime soon. Yields were on the rise again.

Strong streak

Government hiring drove the gains, which extended one of the strongest streaks of job creation on record. The job growth has confounded forecasters expecting job losses as higher borrowing costs slowed the economy.

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Latest U.S. job data indicates that job growth accelerated by 199,000

Work

The latest U.S. job data indicates that job growth accelerated in November 2023, with seasonally adjusted non-farm payrolls increasing by 199,000. 

The unemployment rate has dropped to 3.7%, even as more workers entered the labour market. This points to underlying strength in the labour market and is a positive sign for the U.S. economy. 

U.S. job creation chart January 2022 – November 2023

U.S. job creation chart January 2022 – November 2023

Stocks had risen as investors awaited these latest employment figures, which are closely watched as an indicator of potential moves by the central bank on interest rates.

Mixed reaction

Markets showed a mixed reaction to the report, with stock market futures modestly negative while Treasury yields surged. Job creation showed little signs of slowing as payrolls grew even faster than expected and the unemployment rate fell despite signs of a weakening economy.

Good news for the U.S. economy but Treasury yields are on the up again.