The U.S. economy added 134,000 jobs in September, slowed by Hurricane Florence, but the unemployment rate fell to 3.7%, the lowest in a half century, the Labor Department reported on Friday. Wage growth, the key number for stock market investors worried about more Fed rate hikes, dipped to 2.8%.
Wall Street economists had expected 180,000 new jobs amid a modest hit from Hurricane Florence, 3.8% unemployment and 2.9% wage growth.
Dow Jones futures, S&P 500 futures and Nasdaq 100 futures, which were mixed on the stock market today ahead of the report edged lower after the report, led by tech stocks. The 10-year Treasury yield, which has surged to a seven-year high this week, moved up to 3.23%.
July and August job gains were revised up by a combined 87,000, leaving an average of 190,000 jobs added per month over the past quarter.
Fed Chair Jerome Powell has said that it will take evidence of a softening economy or a sustained sell-off in financial markets to get the Fed to alter its course. Ahead of the jobs report, markets were pricing in 86% odds of a December Fed rate hike and about 60% odds of a March hike, according to the CME Group FedWatch page.
This week’s $15 minimum wage announcement by Amazon (AMZN) won’t show up until the November jobs report, but there has been ongoing evidence that wage pressures are finally bubbling up as companies bid for a scarcity of available, quality workers. Microsoft (MSFT) reportedly handed out six-figure bonuses recently amid competition over cloud-computing employees. Costco (COST) hiked its starting pay by $1 an hour in June. Cheesecake Factory(CAKE) has said its wage growth has jumped to a range of 6% to 7% vs. prior expectations of 5%. Walt Disney (DIS) theme park workers in Florida recently approved a contract that will hike their starting wage by 50% to $15 over three years.