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Another ugly “jobs report” crushed the chances of a Federal Reserve rate hike. Fed Fund Futures data plunged from 18% on Thursday to 8% on Friday looking at the chances of a November hike.
“We are an apolitical institution (we have no political agenda, ya right)…the jobs report was solid”
The Fed’s Mester (a dissenting hawk), October 7, 2016
In reaction to the sad jobs report, this weekend Federal Reserve Vice Chairman Stanley Fischer said there’s little risk that the central bank will fall “behind the curve” in the short term, while emphasizing that a gradual increase in interest rates will be sufficient to meet its goals.
This is a very dovish shift from Fischer. In August in Jackson Hole, he was viewed by markets leaving the door open for two hikes in 2016.
“With the federal funds rate modestly below the neutral rate, the current stance of monetary policy should be viewed as modestly accommodative, which is appropriate to foster further progress toward our objectives,” he said in prepared remarks for a speech on Sunday in Washington.
“But since monetary policy is only modestly accommodative, there appears little risk of falling behind the curve in the near future, and gradual increases in the federal funds rate will likely be sufficient to get monetary policy to a neutral stance over the next few years,” he said.
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US Stimulus 2008-2016
Fannie/Freddie:$7T
Federal deficits:$10T
State/Local deficits:$3T
QE: $4.7T
Total $24.7T
= 156k Sept Jobs
September Jobs report
Household survey
Employed +354K
Full time -5K
Part time +430K*
*gains in household employment solely from part timers, which reflect Holiday season temp hiring.
Services continue to be a strength, ISM non-manufacturing in Sept was pointing this way:
Healthcare +33K
Waiters and Bartenders: +30K
Retail trade: 22K
-Slowdown in Leisure and Hospitality was pretty noticeable at 15k vs 35k three month average from last month.
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Pickup in construction after a very weak August. Could also be a factor in next months report following the Hurricane.
– The Unemployment rate ticked up to at 5.0% on slight pounce in labor force participation up to 62.9 from 62.8.
– Revisions to previous reports resulted in -7,000 less jobs created than initially reported, very marginal.
– 3 month average for job gains at 192k, pretty strong
– Average monthly job gains for this year at 178k, decently weaker than 229k in 2015
– Many service sectors showed continued growth
Gains were in services as ISM told us they would be, with professional and health care leading the way
– Mining was actually unchanged for the first time in many months, a relative positive.
– Many of the more structural indicators such as discouraged workers and long term unemployed were almost unchanged.
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