After disappointing data of late, the US labor market situation improved markedly again in September. At the same time, the unemployment rate fell to 4.1%. Of course, individual monthly figures should not be overestimated. But this report should ease concerns that the US economy is on the brink of a recession, says Commerzbank Senior Economist Dr. Christoph Balz.
The US economy will avoid a recession
“After several disappointing employment reports, the September data was surprisingly favorable. The number of jobs increased sharply, and revisions to the data showed that the situation in the previous months was better than feared. All sectors expanded, except manufacturing and transportation. At the same time, the unemployment rate fell, even the broader measure of underemployment, which includes, among others, involuntary part-time workers, fell from 7.9% to 7.7. %. In addition, wages increased again more dramatically, with the August increase also revised upwards. The only weakness is that employees worked fewer hours on average.”
“Employment figures are based on a sample of selected companies rather than a complete survey of all companies. Therefore, they can fluctuate dramatically from month to month. Consequently, individual monthly values should not be overinterpreted. Thus As the latest reports probably presented the situation as too bad, today’s numbers could be ‘too good’. The six-month average is probably more significant. It continues to show slight weakening. However, there are no signs of an imminent decline. Rather, significant increases in employment and wages suggest that private consumption will continue to support GDP growth. We continue to expect the US economy to avoid a recession.”
“After the 50 basis point rate cut in September, the question now is whether the US Federal Reserve will maintain this pace in November or if there will be ‘only’ a 25 basis point move. The labor market will presumably play the decisive role here, as the Fed does not want to see further weakening in this regard. However, there is little sign of such weakening in today’s figures rather supports our forecast of a ‘small’ step. However, another jobs report will be released before the next meeting, along with quarterly consumer prices and labor costs.”
Source: Fx Street
I am Joshua Winder, a senior-level journalist and editor at World Stock Market. I specialize in covering news related to the stock market and economic trends. With more than 8 years of experience in this field, I have become an expert in financial reporting.
