Interest Rate Roundup

Friday, October 05, 2007

Now THAT was a surprise ...

Whoa -- that September jobs report was a big surprise. Some details:

* Nonfarm payroll growth came in at +110,000 (vs. expectations for a 100,000-job gain). That may not sound like much. But there was a HUGE revision to last month’s number – the 4,000-job loss that had been reported was revised to a 89,000 job gain. July payrolls were also revised up to 93,000 from 68,000.

* By category, manufacturing lost 18,000 jobs (vs. -45,000 a month earlier), while service employment rose by 143,000 (vs. +153,000 a month earlier). By sector, construction lost 14,000 jobs (-22,000 in August), retail lost 5,000 (+9,000 in August), and the financial sector shed 14,000 jobs (-14,000 in August). Notable gains were in government at 37,000 (+57,000 in August), leisure and hospitality at 35,000 (+11,000 in August), and health care at 45,000 (+46,000 in August).

* There's also a separate household survey conducted every month. It showed a 463,000-job gain, the biggest rise since April 2005 (+630,000). The only two marginal negatives: The unemployment rate ticked up to 4.7% from 4.6% and the diffusion index weakened again -- to 52.5% from 53.2%. This index measures what percentage of 278 industries are adding jobs vs. what percentage are shedding them. A number of 50% means the split between "adders" and "subtracters" is even.

* Average hourly earnings rose by 0.4%, above the 0.3% forecast. Moreover, the year-over-year gain in average hourly earnings was 4.1, above the 3.9% forecast.

The knee-jerk reaction in the markets: The U.S. dollar has popped in value, bonds have fallen in value, and stock futures have increased in value.


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