September NFP = +148,000

As a result of the government shutdown, September’s jobs report was delayed until today. This delay is particularly frustrating because these reports are very important in determining the Federal Reserve’s policies.

The Labor Department reported that the economy created 148,000 jobs last month which was well below Wall Street’s estimate of 180,000. The unemployment rate ticked down to 7.2% which is the lowest in nearly five years.

How can the unemployment rate fall despite sluggish jobs growth? The answer is that the labor force participation rate is very low. Simply put, fewer Americans are looking for work. For September, only 63.2% of Americans were in the jobs market. That matches the lowest rate in 35 years.

We’re in an odd situation with the jobs report because bad news from that actually points towards good news for stocks. The market is currently up this morning—the S&P 500 just broke through 1,750. Traders are guessing that the sluggish jobs numbers will cause the Fed to delay any taper ideas until next year. Of course, that’s when Janet Yellen will be at the helm.

In his press conference from last month, Ben Bernanke was very clear that the Fed isn’t following any calendar time table or some magic number that will trigger a taper. Instead, they’re looking at the broad trends in the economy. The Fed meets again next week.

Posted by Eddy Elfenbein on October 22nd, 2013 at 9:55 am

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