Market Wrap – Better payrolls number

The better-than-expected Nonfarm payrolls job report caused risk-on asset classes to tumble and the US dollar to strengthen as the market priced in more aggressive rate action.

Equity markets across the United States sunk after the headline number and unemployment rate came in positively, which firmly reinforced the view of a 75-basis rate hike in October from the FED.

The euro currency sunk as the US dollar firmed, while the price of gold dropped under the $1,700 support level and the price of Bitcoin sagged below the $20,000 benchmark level.

Breaking down the number, the US economy added 263,000 jobs in September of 2022, the least since April of 2021 but above market forecasts of 250,000.

Notable job gains occurred in leisure and hospitality and in health care while big job gains were also reported for professional and business services and manufacturing.

The September reading marks a drop from an average of 420,000 in the first eight months of the year, as higher interest rates and prices started to weigh on the economy.

Still, the number continues to point to a tight labour market with job gains above the monthly average of 167,000 in the 2010s, pushing employment about 500K higher from its pre-pandemic level.

The Unemployment rate ticked down to 3.5 percent, which was a big shock against market expectation of a 3.7 reading. However, the drop was mostly due to labour force participation falling.

The BLS noted that “Hurricane Ian had no discernible effect on the employment and unemployment data for September. Household survey data collection was completed before the storm made landfall in Florida.”

Elsewhere, the Canadian September employment report showed +21.1K,000 versus. +20.0,000 expected Employment change 21,000 versus 20,000 expected.

Additionally, the unemployment rate was at 5.2% vs 5.4% expected and 5.4% last month. Full-time employment hit 5,700 vs -77,200 last month. Part-time employment 15,400 vs +37.5,000 last month.

The Canadian participation rate came in at 64.7% vs 64.8% last month and average hourly wages 5.2% vs 5.6% last month. The USDCAD pair notably firmed after both jobs reports.