Non-agricultural prospects: non-agricultural new materials reach 500,000! The Fed's November reduction is basically stable

GMT+8 At 20:30 on October 8, the US Department of Labor will announce the September non-agricultural employment report. After the unexpected upset of non-agricultural employment data in August, the September non-agricultural report will become a key factor in the Fed's decision to reduce debt purchases in November. At present, the market generally believes that as long as this non-agricultural data is not much different from the expected 500,000, the Fed's November reduction will be a surefire. Some economists even believe that as long as the new jobs are higher than zero, it is enough to meet the QE reduction standard. . Under this circumstance, gold is likely to continue to fall under pressure, and investors need to be psychologically prepared.

The current median expected value of 22 well-known investment banks shows that non-agricultural employment increased by 470,000 in September, the unemployment rate was 5.1%, and the average hourly wage increased by 4.6%.

August non-agricultural review

According to data released by the US Bureau of Labor Statistics, non-agricultural employment in the United States in August fell far short of expectations, the smallest increase since January 2021, and the unemployment rate continued to hit a new low since March 2020.

The specific data shows that the non-agricultural employment population increased by only 235,000 after seasonal adjustment, and the expected increase was 725,000. The previous value increased by 943,000. The unemployment rate was 5.2% and the expected 5.2%. The average hourly wage increased by 4.3% and the expected increase was 3.9%. The previous value rose by 4%.


After the August non-agricultural announcement, federal funds futures hinted that the market believes that the Fed will raise interest rates by 25 basis points at the December 2022 meeting.

Specifically, the market believes that the probability that the Fed will raise interest rates once (25 basis points) at the December 2022 meeting is 65.6%, and 72.6% before the data is released. If there is no interest rate hike at the December meeting in 2022, it will be in February 2023. The probability of raising interest rates once (25 basis points) at the meeting was 74.9%, compared with 83% before the data was released.

Analyst Chris Anstey commented on August non-agricultural: The overall employment growth data was only 235,000, which was significantly lower than expected. Such numbers may make the Fed's debate about reducing the size of debt purchases more interesting.

The entertainment, catering and accommodation industry once again recorded zero employment growth in August, showing that the impact of the new round of the epidemic on consumption and employment activities is higher than expected. As the new wave of infection peaks caused by the Delta virus has not passed, even if there are no further restrictions Measures put pressure on people to reduce their outings spontaneously will also continue to impact the level of economic activity.

Prospects of 22 investment banks: US non-agricultural September may pry open the door of Fed rate hike

The forecasts of 22 large investment banks show that major investment banks have a large gap in the expected growth rate of non-agricultural employment population in September. Specifically, the US non-agricultural employment population growth rate after the September seasonal adjustment is expected to be between 250,000-700,000, and the unemployment rate is expected to be introduced. At 4.8%-5.3%, the average annual rate of hourly wage increase is expected to range from 4.5% to 4.7% .


According to the US Federal Open Market Committee (FOMC) statement, the Fed will almost certainly announce a reduction plan in November. One unsatisfied reduction condition is that the improvement of the job market "makes substantial progress." This week's non-agricultural employment report will become a decisive data point. Some economic research optimistically predicts that this week’s report will show that the number of non-agricultural employment has increased by more than 750,000. With more than 10 million job vacancies, even a small number of people receiving unemployment insurance re-enter the labor market, which may have a significant boost to employment data in September and the next few months.

The market firmly believes that the Fed will reduce its weight in November, unless the employment data is much worse than expected

According to the eight strategists surveyed, if the number of non-agricultural employment in the United States is 200,000, investors will question the health of the economy and make U.S. Treasury yields lower in the near future . This will also cause the market to raise bets on the Fed to postpone or slow down the pace of the reduction. However, economists have estimated that the median number of non-agricultural employment is 500,000, which is more than twice this number.

Although most investors think there is little suspense about the Fed's reduction, they still have to wait for the Fed to clarify the time and speed of the reduction. Supply chain bottlenecks and the expected start of the code reduction in November have brought inflationary pressures, which has caused U.S. Treasury yields to continue the third quarter's rise. This means that the threshold for U.S. debt to fall after the release of employment data is high.

"If the figure is 300,000 higher or lower than generally expected, it may cause a reaction to US Treasury bonds," said Subadra Rajappa, head of US interest rate strategy at Societe Generale.

"If the number is as expected or higher, for example 450,000, it will be enough to maintain upward pressure on market interest rates," said Padhraic Garvey, head of global bond and interest rate strategy at ING Groep NV. "Lower numbers require some interpretation, and may still cause interest rates to rise. To make market interest rates fall sharply, the numbers must be super low, such as 200,000 to 300,000."

Rajaappa expects that if the employment data is very strong, it may reinflate the reinflation transaction and cause the 10-year Treasury yield to rise by up to 7 basis points.

If the data differs greatly from expectations, the impact is obvious, but if it is only a bit short of expectations, the impact depends on how investors interpret it. Details such as average hourly wages and unemployment rate will be the object of interpretation for judging the state of the labor market. Thousands of vacant positions fail to recruit suitable candidates, making the problem even more complicated.

However, not all investors or economists are obsessed with employment reports. Some people say that the inflation and supply chain challenges facing the United States deserve more attention. Bank of America bond analyst Ralph Axel said that the main problem in the labor market is labor shortages rather than job shortages.

"This time it is difficult to convince people that there has been a significant and meaningful change in the employment situation," he said. "After all, no one really thinks we are in recession."

Several forward-looking indicators to look at non-agricultural

[The expansion of the ISM service industry is faster than expected, but the rate of recruitment has slowed slightly]

The expansion of service providers in the United States in September was faster than expected, thanks to the acceleration of business activities and the continuous growth of new orders.

Data released by the Institute of Supply Management on Tuesday showed that the non-manufacturing index rose to 61.9 in September from 61.7 in the previous month. Economists surveyed estimated that the median value was 59.9.


The report shows that, as Americans spend more on eating out and traveling, although fears of the epidemic still exist, the degree is easing. The ISM non-manufacturing business index rose to 62.3 from a six-month low.

At the same time, recruitment difficulties and ongoing logistics challenges have led to inventory depletion. An inventory indicator fell to its lowest level in more than a year last month, and the number of unfulfilled orders increased.

ISM’s service sector employment indicators show that the growth rate of recruits slowed slightly in September. Friday's non-agricultural employment report is expected to show that the non-agricultural employment population increased by nearly 490,000 that month.

[ISM manufacturing growth unexpectedly rises to a four-month high]

Due to strong demand for industrial products and rising inventories, an index measuring US manufacturing activity recorded the fastest growth rate in four months in September.

According to data released on Friday, the Institute of Supply Management (ISM) September manufacturing index rose to 61.1 from 59.9 in August. The index higher than 50 represents activity expansion. Economists surveyed estimated the median value of 59.5.


The data shows that manufacturers have made progress in their efforts to digest the backlog of orders, but the shipping challenges have not yet been eliminated, and there are still delays in delivery. However, strong consumer demand and business investment should continue to support the continued growth of the manufacturing industry in the coming months.

A measure of the growth of backlog orders fell to its lowest level in three months, while the ISM new orders index remained at a solid level of 66.7. Production growth slowed slightly, but factory inventory indicators set the fastest growth rate since October 2010.

[ADP data shows that the number of new jobs created by American companies has reached the highest level in three months]

The number of new jobs created by American companies in September exceeded expectations and the largest increase since June, indicating that as more and more Americans return to work, continuing recruitment difficulties have begun to ease.

According to data released by the ADP Research Institute on Wednesday, the number of employees in enterprises increased by 568,000 last month, and the revised data in August increased by 340,000 . The median forecast by survey economists was an increase of 430,000.


The accelerated pace of hiring shows that it has become easier for companies to fill vacant positions after the federal supplementary unemployment benefits ended on September 6 and the reopening of schools allowed some parents to return to work. Even so, it will take more time to achieve a full recovery in the labor market, and the total number of jobs measured by ADP is still far below the level before the pandemic.

In September, the number of employment in the service industry increased by 466,000, of which employment in the leisure and hotel and catering industries increased by 266,000. Employment in the commodity production industry increased by 102,000, mainly driven by employment growth in construction and manufacturing, both of which recorded the largest increase in a year.

[The number of layoffs by challenger companies rose slightly]

Data show that in September, the number of layoffs by challenger companies was 17,900, a slight increase from the previous value of 15,700.


The vice president of Challenger of Employment Data Corporation said that we know that there are millions of open positions, but many employers have encountered problems and cannot keep up with their applicants. It takes too long to contact job applicants and there is not enough Give an offer quickly, or fail to give a more attractive offer.

The healthcare industry is facing a huge talent shortage, because exhausted medical staff will leave the industry because they may feel that their wages are not commensurate with the workload. Other systems are facing strikes or dismissals of unvaccinated employees, further expanding the shortage of workers.

September was still the largest number of layoffs in the healthcare industry, with a total of 2673 layoffs announced. So far this year, the industry has announced 18,936 layoffs, but a decrease of 66% from the same period last year.

Although the number of layoffs is at a historically low level, the number of hiring surged in September, as large retailers, shipping and storage companies all announced seasonal recruitment plans. In addition, many other recruitment announcements this year are aimed at long-term employees rather than seasonal employees.

[The number of people claiming unemployment benefits for the first time in the United States last week fell more than expected]

The general decline in the number of people applying for unemployment benefits for the first time in the United States last week indicated that the labor market continued to improve.

According to data released by the Ministry of Labor on Thursday , as of the week ending October 2, the number of people claiming unemployment benefits for the first time totaled 326,000, a decrease of 38,000 from the previous week. Economists surveyed before expected the median value to fall to 348,000. As of the week of September 25, the number of continuous claims for unemployment benefits decreased to 2.7 million.


As the economy improves and companies lay off fewer employees, employers are now more focused on recruiting and retaining existing personnel. Moreover, although the United States continues to recover the jobs lost at the beginning of the epidemic, the sharp rebound in demand has exceeded the company's hiring capacity, making the already stretched supply chain even more tense.

The tight supply chain has led to a slowdown in production, and even prompted some companies to temporarily lay off their employees, causing the number of people claiming unemployment benefits for the first time each week to become more turbulent.

Generally speaking, employment data is generally preferred, which may herald a better non-agricultural report.

Institutional and analyst views

[JP Morgan Chase: It is estimated that the number of non-agricultural employment in the United States will increase by 575,000 in September, and the unemployment rate will drop to 5%. The factor driving the forecast higher than the consensus level is the expected rebound in employment in the leisure and hotel industries. 】

[Economists surveyed by FactSet predict that the non-agricultural increase in the United States in September was 470,000, up from 243,000 in August]

[Eamonn Sheridan, an analyst at the financial website forexlive: The median survey consensus at this stage is estimated that non-agricultural increase in September is 460,000 (235,000 in August), and the unemployment rate is expected to be 5.1% (5.2% in August)]

Financial website Fxstreet analyst Joseph Trevisani: Non-agricultural materials increased by 488,000 in September ① Financial website Fxstreet analyst Joseph Trevisani said that the number of jobs in September is expected to increase by 488,000, and ADP has outstanding performance;
②Despite the weak non-agricultural employment data in August, economic data showed good results. The Fed's measures to reduce the scale of debt purchases in November may take effect when the non-agricultural employment data is released in September.

Financial website Fxstreet analyst Eren Sengezer: Non-agricultural materials increased by 500,000 in September ① Financial website Fxstreet analyst Eren Sengeze said that the number of non-agricultural employment in the United States in September is expected to increase by nearly 500,000;
②He also believes that gold may respond more to disappointing employment reports than optimistic employment reports

JP Morgan Chase: September non-agricultural increase of 575,000 ① JP Morgan Chase predicts that the number of non-agricultural employment in the United States will increase by 575,000 in September, and the unemployment rate will drop to 5%;
②The factor that the bank promotes forecasts higher than the consensus level is the expected rebound in employment in the leisure and hotel industries

Goldman Sachs: US September non-agricultural data increased by 600,000 ① Goldman Sachs predicts that the US September non-agricultural employment data will increase by 600,000, and the unemployment rate will fall to 5.2% to 5.1%;
②Goldman Sachs added: "The opening of school contributed to the employment growth in September, an increase of approximately 150,000."