"New Fed News Agency": September non-farm report may close the door to a 50 basis point rate cut by the Fed in November
Timiraos said that the September non-farm payroll report was very strong, which may reduce the possibility of another half-point rate cut at the next Federal Reserve meeting, while officials are expected to continue with the planned quarter-point rate cut. The Fed cut rates by 50 basis points in September because they believed there might have been some lag in rate cuts. Based on the latest report, the hiring situation in July and August was not as weak as reported last month
After the release of the non-farm data on Friday, well-known financial journalist Nick Timiraos, known as the "New Fed Communication Agency," said that the September US non-farm employment report may close the door to a 50 basis point rate cut by the Fed FOMC in November.
Immediately after the non-farm data was released, Timiraos tweeted several times. He stated, "This is a very strong employment report:" Non-farm employment in September increased by 254,000, with the unemployment rate dropping to 4.1%. The revisions for July and August totaled 72,000.
Calculating the average over three months, the employment increase in August was revised up from 116,000 to 140,000, and the employment increase in September was 186,000.
In September, average hourly earnings rose 4% on a 12-month basis, but Timiraos also pointed out that average weekly earnings fell by 3.4%.
The weekly total wage index for private sector employees, which combines recruitment, wages, and hours, rose by 4.8% over the past 12 months. This is lower than last year's growth rate and close to the level during the pre-pandemic economic expansion.
Timiraos later released a short commentary stating that the September non-farm employment report may close the possibility of another 0.5% rate cut at the Fed meeting next month, while officials maintain the planned pace of a 0.25% rate cut.
Timiraos pointed out that the Fed began cutting rates last month with an unconventional 0.5% rate cut, mainly because moderate inflation data this summer and signs of cooling in the labor market led officials to believe that they may have been somewhat behind in rate cuts. However, Friday's report showed that the hiring situation in July and August was not as weak as reported last month, which was before the Fed's rate cut, and the employment situation in September was even stronger.
Citing Fed Chairman Powell's words earlier this week, Timiraos said that officials are not in a hurry to cut rates, and the strong non-farm employment data in September will further strengthen this view.
Timiraos said that Fed officials describe recent rate cuts as a "re-calibration" of interest rates to a level that does not overly restrict the economy, and a 0.25% rate cut in November would still align with this strategy