The employment data were released at 8:30 and the change in employment, -35,000, was far better than expected. Read two articles about this, one from MarketWatch, the other from Money.com.
A few things to note.
(1) The payroll employment number is derived from a sample of employers. The unemployment rate is based on a survey of households.
(2) The payroll employment value, -35,000, does NOT indicate that only 35,000 jobs were lost as the result of Hurricane Katrina (Rita's effects are in next month's report). The loss is the difference between what the job total would have been, around +200,000, and this morning's number of -35,000 -- Katrina-related loss of around 165,000.
(3) Jobless claims (released on Thursdays) have painted a very different picture of the job loss from Katrina, indicating around 300,000 jobs lost. Will this show up next month? Was today's number a "bad" estimate? Stay tuned.
(4) The unemployment rate, which is derived from a survey of households, rose only slightly, from 4.9% in August to 5.1% in September.x
The early reaction to the job data is that it indicates more strength to the economy than what many thought, raising the likelihood that the Fed will continue to raise rates, up to the current view of 4.75% (my value is still 4.5%). As I am writing this, the stock market (DJIA) is up 38 points, a bullish response to the data, while the fixed income (bond) markets are less than thrilled, with the 10-year bond yield rising to 4.42% - taking out initial resistance. Next stop for $TNX - 4.65%.
For those doing the mortgage rate as their forecast topic, note that even before today's numbers, the 30-year fixed rate mortgage had risen to just under a 6% national average.
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