Disappointing data from the US labor market

In the US economy in non-agricultural sectors, 194 new jobs were added in September. posts. Expectations reached 500. Thus, the data could have disappointed significantly, showing that the situation in the US labor market is improving at a slower pace than assumed.

Publication at the level of less than 200 thousand. marks the worst reading this year. According to the data, the highest increase in employment in September was in the recreation and hotel industry and amounted to 74 thousand. In professional and business services, employment increased by 60 thousand. jobs, in retail by 56 thousand, and in transport and storage by 47 thousand. Employment in healthcare fell by 18, and in public education by 161.

Slow job growth means that the US economy has still not returned to pre-pandemic employment. About 5 million jobs are still missing for this result. More than 17 million jobs have been recovered since April. On the other hand, the unemployment rate fell to 4,8%. from 5,2 percent a month earlier and is the lowest since March 2020. Before the crisis related to the epidemic, the unemployment rate was at the level of 3,5%.

Market reaction after the NFP

The reading of the main data significantly below market expectations could lead to a weakening of the US dollar. EUR / USD main pair exchange rate has risen since this morning from 1,1540 to 1,1585, even though the interest rate market still believes there may be hikes in 2022 and that tapering will be carried out by the end of the year.

In turn, we can observe a much greater reaction in the precious metals market. The price of gold seems to rise from about $ 1760 to $ 1780, while the price of silver rose from about $ 22,5 to over $ 23 per ounce. The lack of a quick improvement in the labor market, along with a significant increase in the costs of doing business, may cause concerns about the economic situation, including potential stagflation in the US. Added to this is the possible increased debt supply by the US Treasury Department to secure funding for the federal government for a longer period than just December.

On the stock market, US index futures seem to be up. The Nasdaq contract appears to be up almost 0,5%, the S&P 500 futures are up 0,3%, and the DJIA is up 0,1%. Perhaps some bulls believe that weaker labor market data will stop Fed against tapering and rapid rate hikes, which will ultimately prolong the significant stimulation of the financial markets and ensure further longer and cheap financing.