From Wall Street Economists To Trump Campaign: How Does Everyone View The Latest Nonfarm Payrolls?

As the October non-farm payrolls unfolded in a dramatic fashion, various market participants have interpreted the data itself and its derivative topics from various angles.

The Employment data released on Friday morning were merely 12,000. Despite the impact of two major hurricanes and the Boeing strike, this number completely missed market expectations (113,000). More interestingly, the unemployment rate rose from 4.05% to 4.14%, which can be rounded to 4.1%.

For the capital market, it is also pleasing to see data that consolidates the Federal Reserve's interest rate cut cycle, but what's more interesting is the different interpretations of the same data by various parties.

White House 'Glosses over' The Number, But Trump Starts Another Attack

As usual, President Joe Biden's office continued to issue a statement on the non-farm data. This statement simply glossed over the "12,000" with "lowered job growth."

Biden stated in the declaration that although the unemployment rate remained at 4.1% in October, the slow employment due to hurricanes and strikes is expected to rebound in November. Subsequently, the soon-to-retire Biden specifically emphasized that during his tenure, he created 16 million jobs, averaging 180,000 per month, and the unemployment rate during his tenure was also the lowest in nearly 50 years.

Undoubtedly, the Trump campaign immediately attacked Harris with the newest data. His spokesperson said in a statement that Friday's employment growth was a "catastrophe," and the report clearly revealed "how badly Kamala Harris broke our economy."

Although investors are well aware that the reasons for the poor data are more related to disasters. Trump's allies have been accusing the Biden administration of manipulating employment data for political interests, which the White House denies.

"Revision" Does Exist

Besides the impact of hurricanes and Boeing strikes, what actually confuses the market habitually is that the Labor Department has once again downgraded the employment data for the previous two months, with August down by 81,000 and September down by 31,000. According to statistics, the Biden Department of Labor has revised the non-farm data for seven out of the first nine months of this year, cumulatively erasing 818,000 jobs.

This also means that there will be a highlight in the November and December non-farm reports—If October only created 12,000 jobs, does that mean there is a chance it could turn negative next month?

More importantly, although the October non-farm data barely turned positive, if you exclude the 40,000 new government jobs, the actual private employment is negative, and it is the first time it has turned negative since December 2020.

Rate Cut Next Week Is For Sure?

For Wall Street analysts, Friday's data is more of a one-time accident, and there is no way to chew out more insights about the economy and interest rate cuts.

Seema Shah, Global Chief Strategist at Principal Global Investors, said that in-depth thinking about the numbers indicates that under all the noise and interference, the labor market is basically slowing down. The consensus forecast of adding 100,000 jobs has already considered the impact of hurricanes, so the significant downward surprise indicates potential weakness. This reaffirms that the Federal Reserve must adhere to its easing cycle, and there may be interest rate cuts of 25 basis points in November and December.

Charlie Ripley, Vice President of Portfolio Management at Allianz Investment Management, said that overall, this report does not provide much information to judge the trend of the labor market, which makes it likely for the Federal Reserve to cut interest rates by 25 basis points next week. It seems we still need to wait for another month of economic data to better assess the Federal Reserve's monetary policy direction.

Anna Wong, Chief U.S. Economist at Bloomberg Economics, who successfully predicted tonight's data, said that excluding temporary factors and adjusting the exaggerated sources in the data, the underlying employment growth may be below the speed required to stabilize the unemployment rate, and the unemployment rate is expected to rise again in the coming months. The October employment report will enable the Federal Reserve to cut interest rates by 25 basis points as planned on November 7.

Jason Pride, Chief Investment Officer of an investment management firm, said that investors should be cautious about this report because there may be significant revisions in the coming months. The Federal Reserve does not have many clear indicators, but some underlying data seems good enough for them to make a 25 basis point interest rate cut next week.

Pride predicted that, without significant disruptions, the future baseline scenario should be an additional 50 basis points of interest rate cuts within the year and further cuts in 2025, stabilizing in the 3%-3.5% range by mid-year.