It's the first Friday of the month, which means it is time for the Big Kahuna of economic data - the jobs report. So, without further ado, let's get to the report and review the bevy of numbers.

Point number one: Ignore this month's headline. You see, Hurricane Florence played a role in the job creation in September. As such, the 134K new jobs reported last month is no reason to panic - and will likely be revised higher.

Instead, we need to focus on the revisions to the last two months, the 3-month average, and Wednesday's ADP jobs report (which focuses on the private sector).

As usual, there were revisions to the two previous reports. July's total was revised upward to 165K from 147K, while August's job gains saw an increase of 69K to a stunning 270K. In sum, the adjustments mean that the economy created 87K more new jobs than initially reported. Impressive.

The average monthly job gains over the past three months, which, yes, includes the likely-to-be-revised-higher September number currently stands at 190K. Bottom line: This number remains strong.

The next big headline in the report was the nation’s unemployment rate, which came in at 3.7%. This was below the last month's reading of 3.9%. Note that the current unemployment rate represents a more than 49-year low as the last time the rate was at 3.7% was December 1969. You know, when man first walked on the moon.

On the all-important inflation front, the government reported that wages grew by 0.3% in September, which was in line with last month's reading. And on the critical year-over-year basis, wages increased by 2.8% which was a tenth below last month's reading of 2.9%. Phew.

The key here is that wage growth is the hot topic of the day. Recall that former Fed Governor Kevin Warsh said Thursday that wage pressures are "showing up everywhere except in the government data." Thus, the expectation is for wage inflation to begin appearing in the government's monthly jobs report at some point in the future.

Next, the "U6," which represents a broader measure of unemployment due to the fact that it includes "discouraged workers," rose to 7.5% from 7.4% in August.

Finally, recall that according to ADP's report, the private sector, added 230K new jobs in September, which was well above the 163,000 new jobs last month.

Some are calling this morning's report another "Goldilocks" number as wage growth wasn't "too hot" and the recent job growth, which is expected to slow at some point, wasn't too cold. We'll see. 

In response to the report, the yield on the 10-year has made another new high at 3.223%, which is certainly getting the attention of the stock market. The question of the day is if the "rethink" that is occurring in the bond pits will make its way to stocks. Stay tuned.

Thought For The Day:

You have an inner voice that is overwhelmingly powerful. Learn to trust in what truly inspires you. -Dr. Wayne Dyer

Wishing you green screens and all the best for a great day,

David D. Moenning
Founder, Chief Investment Officer
Heritage Capital Research

HCR Focuses on a Risk-Managed Approach to Investing
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