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US Unemployment Rate Drops

James Boston
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US Unemployment Rate Drops

Short term US jobless data yesterday clearly set the tone for the detailed update today on the current state of the employment market. The headline economic figure is the official Unemployment Rate for the month of September, this now stands at 5.9% following August’s reading of 6.1% and a market expectation for no material change to the rate today. The key market moving number however is the Non Farm Payrolls, this has been announced as 248k for September and the revised August figure now stands at 180k, by comparison the expected September reading was 215k.

There has been no significant deviation from trend in the either the earnings or hours per week figures. The latest Average Hourly Earnings data is showing a month on month flat change of 0.0%, August’s number was 0.3%, this was largely expected not to change. Year on year the Average Hourly Earnings number is now showing expansion of 2.0%, down from 2.1% the prior month. The Average Weekly Hours number is up slightly at 34.60, last month’s reading was 34.50, a level at which it has been static since it’s tick up in April. The September Labor Force Participation Rate has also shown no material change from recent previous readings recording just a slight fall from 62.8% to 62.7%.

As the US Federal Reserve prepares to complete the wind down of it’s large scale asset purchase program later this month, questions are arising over potential changes to the Feds forward guidance on interest rates. The original plan was that rates would be free to rise from six months after the end of the ‘tapering’ phase, that is six months from this month. With the asset purchase program out of the way now however it is believed that the Federal Open Markets Committee is re-examining the potential for a more formal link between it’s interest rate decisions and the state of play in both inflation and the employment markets.

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