What the Jobs Report Can Tell Us

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Another day, another crucial data point to determine whether our Federal Reserve has enough of an excuse to raise rates -- even though reality here at home and macro conditions across the globe absolutely do not call for a rate hike here. Today, the nonfarm payrolls data are released at 08:30 a.m. ET.

This week, India, which will see its GDP grow by around 7% for 2016, saw conditions warranting a 50 basis points cut in interest rates. However, the geniuses at our Federal Reserve think the U.S. is ready for a rate hike with our "oh, so impressive" growth of 1% at best. Laughable!

The Fed's zealous crusade is causing the policymakers to overlook many serious issues here at home and overseas, including the following:

  • Worries about China's economic growth and the resultant slowdown in other emerging markets;
  • The slaughter in commodities globally;
  • Widening credit spreads;
  • Escalation of the Syrian issue, with even Russia now involved directly in the Middle East (more of a geopolitical issue, but a worry nonetheless);
  • Continued layoffs of high-paying jobs in Corporate America -- see Hewlett-Packard (HPQ) and Caterpillar (CAT) among myriad others;
  • Just yesterday, September data showed a slowing of the rate of growth in U.S. manufacturing (just over 50-below would be recessionary). Yes, I know that's a one-month data point, but it's still a data point;
  • Declining corporate profits for American companies; analysts are expecting third-quarter earnings to decline 4% year on year;
  • The possibility of a U.S. government shutdown by the end of the year thanks to stalemates among our "vaunted" politicians;
  • Also yesterday, Challenger Grey, the HR services company, said that there was a 43% surge in planned layoffs among the participants of their survey. Just in time for Christmas cheer (nice, huh?).

U.S. September employment data is expected to show an increase in nonfarm jobs of 203,000, with a range of a low of 178,000 to a high of 236,000. 

In August, the NFP number had been a disappointment, with just 173,000 non-farm payroll additions, which more than likely led the Federal Reserve to pause on its rate hike crusade at the September FOMC meeting.  

The unemployment rate is expected to hold steady at 5.1% with a range of 5.0% to 5.2%.

The average workweek is also expected to remain at 34.6 hours, with a consensus range of 34.5 to 34.6.

The numbers will be out shortly. Stay tuned.

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