The US economy added 263K jobs in September of 2022, the least since April of 2021 but above market forecasts of 250K. Notable job gains occurred in leisure and hospitality (83K) and in health care (60K) while big job gains were also reported for professional and business services (46K) and manufacturing (22K). The September reading marks a drop from an average of 439K in the first eight months of the year, as higher interest rates and prices started to weigh on the economy. Still, the number continues to point to a tight labor market with job gains above the monthly average of 167,000 in the 2010s, pushing employment about 500K higher from its pre-pandemic level.
The US unemployment rate fell to 3.5 percent in September 2022, matching July’s 29-month low and coming in below market expectations of 3.7 percent, in another sign overall labor market conditions in the world’s largest economy remain tight. The number of unemployed persons declined by 261 thousand to 5.75 million in September, while the number of employed increased by 204 thousand to 158.9 million. The labor force participation rate edged down to 62.3 percent from 62.4 percent.
Average hourly earnings for all employees on private nonfarm payrolls in the US rose by 10 cents, or 0.3% to $32.46 in September of 2022, the same pace as in August, in line with market forecasts. In September, average hourly earnings of private-sector production and nonsupervisory employees rose by 10 cents, or 0.4%, to $27.77. Over the past 12 months, average hourly earnings have increased by 5.0%, following a 5.2% rise in the prior month and slightly below market estimates of a 5.1% gain.
The US Dollar spiked following the data as such an outcome is unlikely to trigger a Fed pause anytime soon, even though this is the softest NFP since April of last year. Yet, the US Dollar upside momentum faded right after the US opening bell. Over the past few days, the upside momentum has eased, and we believe that the Dollar index is in a topping phase after the recent rally.
In Equities, all three major indices opened the day lower with over 1% on average for each index, however, they were able to get some support. So far, the outlook remains bearish. However, we believe that a bottom could be around the corner during the last quarter of the year since we are in an extreme fear phase, which could bring a lot of opportunities over the next few months, and we will be very cautious and selective.