Total U.S. nonfarm payrolls gained only +661.0K mom in September, weaker than John Herrmann's forecast and the consensus estimate. In contrast, private nonfarm payrolls gained +877.0K mom, stronger than his forecast and the consensus estimate. As John previewed, the Bureau of Labor Statistics did, in fact, under-count total education staffing, especially at K-12 public schools.
The especially “poor” September Repose/Collection Rate (just 70.4%) points to risk of a +225.0K to +325.0K upward revision to the September total nonfarm payroll outcome over the coming two monthly reports. The October monthly report likely may see a large gain in education payrolls as well. Lastly, the September report saw yet another big move down in the unemployment rate – spot on to John’s forecast of 7.9%. This decline partially reflects some 772.8K individuals who incorrectly reported themselves as “employed, but absent from work (other reasons)” – which suggests that the U3 rate for the month of September really may be as high as 8.3%. How is an investor to interpret these mixed messages?!
In this episode, MUFG U.S. Rates Strategist, John Herrmann, reviews a mixed September employment report, including his forecasts for non-farm payrolls and the unemployment rate versus the actual results. He also puts this in perspective versus the 38% rebound in growth he's expecting to occur in the 3rd quarter and discusses the steepening of the 2s-30s Treasury yield curve towards 191.1 bps target over the coming eighteen months.
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