Jobs report delivers exactly the right measure of bad news for end of year rally

10/22/2013 2:30 pm EST


Jim Jubak

Founder and Editor,

The U.S. stock market got what it wanted in this morning’s September jobs numbers.

The economy added a disappointingly low number of jobs in September, but the wage and hour figures were strong enough so that the economy does not look to be falling off a cliff.

All in all, the numbers are disappointing enough to buttress the current consensus view on Wall Street that the Federal Reserve won’t begin to taper off its current $85 billion in monthly purchases of Treasuries and mortgage-backed assets until March 2014 and positive enough on economic growth—and especially consumer spending—not to raise worries that the economy is about to slow radically.

As of 1:30 p.m. New York time the Standard & Poor’s 500 was up 0.42%.

The U.S. economy added 148,000 jobs in September. That was down from an upwardly revised 161,000 for August and below the consensus of economists surveyed by of 183,000 jobs.

So much for a strong number that would tell the Fed it was safe to remove stimulus from the U.S. economy.

But the details of the report showed decent strength. Hourly earnings rose 0.1% and the average workweek stayed steady at 34.5 hours. The combination sent aggregate wages up 0.2% in September. That’s not enough to lead to hot economic growth but it is supportive of steady growth in consumer spending.

In a trend that’s likely to reverse as we get closer to the holiday shopping season, full-time employment climbed by 691,000 in September while part-time jobs dropped by 594,000. Wal-Mart (WMT) has said that it will hire 55,000 seasonal workers for the holiday retail push. That would be 10% more than in 2012. Kohl’s (KSS) has said it will add 53,000 holiday workers. That’s about the same as last year.

The employment figures released today for September don’t include the effect, if any, of the government shut down/debt ceiling crisis on the economy. The October report, now scheduled for release on November 8 (instead of November 1) will include those effects but it won’t tell the Fed, which meets on October 30 and December 18, anything about how lasting those effects might be.

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