Commentary: U.S. employers hired more workers than expected in September and job gains for the prior months were revised higher, according to data gathered by the Labor Department. Government figures show nonfarm payrolls grew 103,000 in September - boosted in part by the return of 45,000 striking Verizon Communication workers who had dropped from the headline figure in August. Most economists had anticipated a September payroll gain in the neighborhood of 60,000 workers. The jobless rate held at 9.1%. Hours and earnings increased. Labor Department "data wonks" announced they had undercounted employment gains in July and August by a cumulative 99,000 workers.
Judging by this morning's rather hard sell-off in the mortgage market one might conclude that all of the labor market woes were resolved last month -- and all is now right and well with the labor market.
In absolute terms today's September nonfarm payroll data is weak - just not as weak as many analysts had anticipated. The sobering truth is that the national jobless rate has exceeded 8.0% since February 2009, the longest stretch of such elevated joblessness since monthly records began in 1948. The economy needs to grow at a 2.5% rate, with payrolls expanding by 150,000 jobs a month, just to keep the national jobless rate from rising.
The moral of the story here is that today's sell-off in the mortgage market is probably driven far more by investors profit-taking and position squaring in front of a 3-day weekend -- than the apparent reaction to slightly stronger than expected September nonfarm payroll data. If there is merit in my assessment - a large part of the selling pressure currently so evident in the mortgage market this morning will likely abate after 1:00 p.m. ET today.
Looking ahead to next week -- Uncle Sam will be in the credit markets looking to sell $66 billion worth of 3- and 10-year notes together with a smattering of 30-year bonds. The Treasury's auction process will run from Tuesday through Thursday. On Friday, the Commerce Department will release the September Retail Sales report. Back-to-school and auto spending appears to have been solid. Most investors are expecting overall sales improved 0.6% on a month-over-month basis while the ex. auto component of the report is expected to show a more modest gain of 0.2%. Actual numbers that match or fall below current expectations will tend to be supportive of steady to perhaps fractionally lower mortgage interest rates while numbers that exceed the forecasted values will probably assert some modest upward pressure on rates.
THE MARKET IS ALWAYS RIGHT! . YOU AND I ARE SOME OF THE TIME
