Jobs Report Still Too Strong For The Fed; Dow Jones Futures Fall

The September jobs report showed that payrolls rose by 263,000 and the unemployment rate fell, keeping pressure on the Fed.

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May 14, 2023 • 2 min read

The Federal Reserve's efforts to slow down the labor market failed. U.S. employers created 263,000 solid jobs in September. The unemployment rate dropped to 3.5%, which is the lowest in a half century. The Dow Jones Industrial Average dropped after the jobs report. This put this week's attempt to rally the stock market on shaky grounds.

The private sector added 288,000 new jobs while the government lost 25,000.

The increase in the average hourly wage was 0.3%, which is consistent with expectations. The annual wage growth was 5.0%, which fell short of expectations of 5.1%.

The combined job gains for July-August were revised upwards by 11,000 dollars. The average gain in jobs over the last three months has been a solid 372,000.

The unemployment rate was forecast to remain at 3.7%. The unemployment rate fell by 57,000 this month as people who were working or seeking work left the labor force. Meanwhile, 204,000 people found jobs.

The percentage of people aged 16 and older who are in the workforce has dropped to 62.3%.

The Labor Department's monthly employer survey provides the headline figures for employment and wages. Separate household surveys provide information on labor force participation, employment status and unemployment.

Dow Jones fell 1% on Friday morning's early stock market activity. The S&P500 lost 1.3%, and the Nasdaq Composite 1.8%.

After closing Friday at bear market lows, the Dow and other major indices surged on Monday and on Tuesday. The Dow fell in the last two sessions, as oil prices increased. Fed officials also pushed back on talk that financial market volatility could prevent further monetary tightening.

The markets priced in an 82% chance of a 75 basis-point rate increase on November 2 and even more odds for a half-point rise on December 14.

The Dow Jones closed Thursday at 18,7% below its all-time high of Jan. 4, but was still 4.2% higher than its closing low on Sept. 30, The S&P is up 4.4% since last week's closing low but down 21.9% compared to its all-time high. The Nasdaq Composite is up 4.7% from its closing low in the bear market, but still 28.3% lower than its all-time high.

The 10-year Treasury yield increased 6 basis points, to 3.89%. This is close to recent 12-year highs of around 4%.

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Leisure and hospitality added 83,000 new jobs. The factory employment increased by 22,000 jobs.

The number of construction jobs increased by 19,000. Payrolls for health care and social assistance increased by 75,000. Retailers lost 1,100 jobs while transportation and warehouse jobs dropped 7,900.

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