"Economists React to the September Jobs Report: ‘Nothing Good to See Here’"

From Real Time Economics:

Nonfarm payrolls increased a seasonally adjusted 142,000 in September, far below the trend over the past 18 months and short of analysts’ expectations. Job growth was also weaker earlier this summer than previously thought. The data is sobering for Federal Reserve officials as they contemplate raising interest rates for the first time since 2006. Here’s what economists had to say about Friday’s report:

“Nothing good to see here….Beyond the headline number, we see broad-based weakness in U.S. labor markets, with the past month’s revisions now showing a decidedly softer trend growth in jobs….We retain our view that rate hikes will be deferred past year end and we believe this employment report substantially reduces the probability of a rate hike from the Federal Open Market Committee this year.” —Michael Gapen, Rob Martin, and Jesse Hurwitz, Barclays Research

“The weaker employment growth over the past few months is a surprise given recent solid economic data….It could be that businesses have turned cautious in the wake of the recent financial market turmoil. But job growth should rebound through the rest of this year on the back of consumer spending and housing. In summary, the 142,000 rise in September payroll jobs, along with a 59,000 downward revision to job growth in July and August combined, declines in household employment and the labor force, and flat average hourly wages, constitute a disappointing jobs report for September. This likely rules out an increase in the fed funds rate when the FOMC next meets in late October, and a mid-December rate increase now looks less likely. Financial markets are now pricing in the first increase in the funds rate in March.” –Gus Faucher, PNC

“We are struggling to find much silver lining in the September jobs report, which delivered downside surprises in the headlines, details, and revisions….The private-sector job profile was even gloomier than the top line….Public Fed commentary (even from Fed ‘doves’) has been guiding the market strongly towards a rate hike by year-end.  And there are still two jobs reports between now and the December FOMC meeting. Our central call is still for a December liftoff, but today’s disappointing jobs data do little to support the case for a higher policy rate this year.” –Jay Feldman, Credit Suisse

“The U.S. economy added a very meagre 142,000 jobs in September, marking the slowing pace of jobs growth since March. This comes on the heels of the equally disappointing 136,000 gain in August. Net revisions were particularly weak at -59,000, while the sharp drop in the labor force underscores some souring in the outlook for the labor market. There is no redeeming quality to this report and it does point to a germane weakening in U.S. labor market momentum. No special factors were at play here.” — Millan Mulraine, TD Securities

“Given good household real income growth and rates at zero our assessment is this is a soft patch, though clearly the tightening in financial and monetary conditions and external demand weakness is a factor. We expect the economy to continue to grow above trend. At this stage we pushed the date of lift off to March. Our concern is that the data is reflective of something more worrying about the underlying health of the U.S. economy, but at this point it is a bit too early to tell. A more sustained soft patch or weather disruptions could alter the Fed’s plans in [the first quarter] and push liftoff back yet another quarter.” –BNP Paribas

“This is dovish for the Fed, but bearish for equities….Today’s employment report is much weaker than had been expected, and although it should push the probability of October Fed action to zero, the slowed pace of job gains is disconcerting. Today’s report is likely to dampen expectations of a Fed rate hike for December.” –Jason Schenker, Prestige Economics

“The stock market is hopelessly confused. Fed zero rates are going to continue for longer, but I guess this Fed stimulus is not going to help if the U.S. economy tanks. The jobs market struck out in September as far as the Fed’s concerned.  No rate hike in October now certainly, and 2015 looks increasingly impossible.  If the committee was looking for more improvement, this isn’t it.” –Chris Rupkey, Bank of Tokyo-Mitsubishi

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Also at RTE:
The September Jobs Report in 11 Charts