After the release of the non-farm payrolls data on Friday, Nick Timiraos, a well-known financial journalist known as the "new Fed news agency", said that the United States non-farm payrolls report for September could close the door for the Fed's FOMC to cut interest rates by 50 basis points in November.
Immediately after the release of the non-farm payrolls data, Timiraos tweeted several times in a row. He said it was a very strong jobs report: non-farm payrolls rose by 254,000 in September and the unemployment rate fell to 4.1 percent, with a revised 72,000 for July and August combined.
Using a three-month average, employment growth was revised upwards to 140,000 in August from 116,000, compared to 186,000 in September.
In September, average hourly earnings rose 4% on a 12-month basis, but Timiraos also noted that average weekly earnings fell 3.4%.
The weekly gross wage index for private sector employees – a combination of recruitment, wages and hours – has risen by 4.8 per cent over the past 12 months. This is lower than last year's increase and close to the level of the pre-pandemic economic expansion.
Timiraos then commented that the September non-farm payrolls report could close the possibility of another half-percentage point rate cut at next month's Fed meeting, while keeping officials on track for a quarter-percentage point rate cut.
Timiraos noted that the Fed began cutting rates last month, starting with an unconventional half-percentage point cut, largely because this summer's modest inflation data and signs of a cooling labor market have led officials to believe that they may be a little behind in cutting rates. But Friday's report showed that hiring in July and August was not as weak as it was reported last month, when data came out before the Fed cut interest rates, and employment was stronger in September.
Citing Fed Chair Jerome Powell on Monday, Timiraos said officials were in no hurry to cut interest rates and that strong nonfarm payrolls data for September would further reinforce that view.
Fed officials have described the recent rate cut as a "recalibration" of interest rates in order to adjust rates to a level that is not too restrictive to the economy, and another quarter-point cut in November would still be in line with that strategy, Timiraos said.
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