In September, the US non-farm payroll added 336,000 jobs, far exceeding expectations. The figures for July and August were also significantly revised upwards. As a result, US bond yields have surged.

On Friday, September 1st, the US Bureau of Labor Statistics released data showing that non-farm payrolls in the US increased by 336,000 in September, the largest increase since the beginning of the year, far exceeding expectations of 170,000 and the previous value of 187,000 in August. The employment data for the previous two months has also been significantly revised upwards: the number of new jobs in August has been revised upwards by 40,000 to reach 227,000; the number of new jobs in July has been revised upwards from 157,000 to 236,000. The total number of jobs in July and August has increased by 119,000 compared to the previous report.

The unemployment rate in the US in September was 3.8%, higher than the expected 3.7% and the previous value of 3.8% in August. US Treasury Secretary Yellen pays more attention to the more comprehensive U6 unemployment rate, which is 7%. This includes people who are not actively seeking employment and part-time workers who want to find full-time jobs.

Wage growth was lower than expected. The average hourly wage in September increased by 0.2% compared to the previous month, lower than the expected 0.3% and the previous value of 0.2% in August; it increased by 4.2% compared to the same period last year, marking the smallest annual increase since mid-2021, lower than the expected 4.3% and the previous value of 4.3%. The income of non-managerial employees, who make up the majority of the workforce, recorded the smallest MoM increase since 2020.

The average weekly working hours in September were 34.4 hours, in line with expectations and the previous value of 34.4 hours in August.

The labor force participation rate remained stable at 62.8%, in line with expectations and the previous value in August. In recent months, the imbalance between labor supply and demand has been tending to balance, partly due to the improvement in the labor force participation rate. Last month's non-farm report showed a surprising increase in the labor force participation rate in August, reaching the highest level since the outbreak of the COVID-19 pandemic in February 2020. However, it is still half a percentage point lower than the pre-pandemic level.

In September, private sector employment in the US increased by 263,000, also far exceeding expectations of 160,000 and the previous value of 179,000 in August. Manufacturing employment increased by 17,000 in September, higher than the expected 5,000 and the previous value of 16,000 in August.

Looking at specific industries, many sectors performed strongly. The leisure and hospitality industry led the way, adding 96,000 new jobs. Government jobs increased by 73,000, healthcare added 41,000, and professional, scientific, and technical services added 29,000. Due to the labor dispute in Hollywood, the film and recording industry lost 5,000 jobs, totaling a loss of 45,000 jobs since the dispute began in May. Historically, September's non-farm payroll data has been difficult to predict. This is mainly because the Bureau of Labor Statistics needs to make adjustments to account for certain factors that typically occur in September. These factors include layoffs in the leisure and hospitality industry at the end of the summer tourist season, as well as a significant amount of hiring related to the start of the new school year (such as hiring teachers and support staff).

Industry insiders have pointed out that while Friday's non-farm report was hardly affected by the recent surge in strikes, this situation may change and impact the October report. The unprecedented strike by the United Auto Workers against traditional Detroit automakers is expected to have an impact on employment data.

It is also important to note that the non-farm employment report is compiled from two separate surveys. The survey of businesses and government agencies produces data on employment numbers and wages, which show astonishing job growth. However, the survey of households, which is used to calculate the unemployment rate, shows a much smaller increase of 86,000 jobs for the month.

Overall, the September non-farm report in the United States reflects strong job growth, indicating that the US economy is still performing well despite rising interest rates, major strikes, and the possibility of a government shutdown. The surprising vitality of the US labor market suggests that businesses remain confident in their sales prospects. Although hiring has slowed down since last year, its resilience continues to be a key support for household spending and overall economic growth.

However, for the Federal Reserve, the strength of the labor market may hinder its efforts to curb inflation. The strong labor market provides justification for the Fed to raise interest rates again.

After the release of the non-farm data, the market reacted sharply:

• According to data tracked by the CME, traders in the federal funds futures market have increased the likelihood of a Fed rate hike before the end of the year to around 44%. Swap prices indicate that the market has fully digested the Fed's rate cut, pushing it back from July next year to September.
• US stock futures quickly turned sharply lower, with Nasdaq 100 futures falling by about 1%.
• The US dollar index rose by about 30 points in the short term, reaching 106.61. It continued to rise, reaching 106.95, with a daily increase of 0.57%.
• US bond yields surged in the short term, with long-term bond yields rising by more than 10 basis points. The 30-year Treasury yield rose to 5.04%, the highest level since 2007, and the 10-year Treasury yield exceeded 4.88%, the highest since 2007.

Earlier this week, the United States released two other major employment data, both of which triggered strong market reactions. Although the data varied in terms of quality, overall, good data became bad news for the market, and vice versa. Investors have been concerned recently that the resilience of the US economy may force the Fed to maintain high interest rates, and may even continue to raise rates in the face of sustained high inflation.

• On Tuesday, the US August JOLTS job openings far exceeded expectations, with a surge in white-collar positions, causing a sharp drop in US stocks that day.
• On Wednesday, the US September ADP employment increased by only 89,000, far below expectations, reaching the lowest level since early 2021, boosting a significant rebound in US stocks that day.