Introduction:

In September, non-farm workers were mainly restricted by the epidemic and the seasonal adjustment after disturbing the teaching order caused the education industry to change from "real increase" to "staff reduction". It is expected that non-farm workers will return to relatively rapid growth in the follow-up, and the announcement of Taper in November is still a high probability.

Summary:

Events:Non-farm payrolls in the United States were lower than expected again in September. 194000 new jobs were created, up from 131000 to 366000 in August. The unemployment rate is 4.8%, the previous value is 5.2%, the labor force participation rate is 61.6%, the previous value is 61.7%, the average annual hourly wage rate is 4.6%, and the previous value is 4.3%.

The main reason for the lower-than-expected non-farm employment is the double disturbance of the epidemic, excluding the disturbance of the education industry, the recovery of employment is still on the way.

1) the statistical window for non-farm payrolls data is in mid-early September (including the week of December), when new confirmed cases in the United States have just begun to peak, and generally remain high, despite the disruption to the recovery of the service industry. but Leisure Inn Hotel still added 70, 000 jobs, up from 40, 000 last month, and about 50, 000 jobs in retail, transportation and warehousing.

2）The epidemic has disturbed the conventional seasonal factors of education, resulting in a large fluctuation in the education industry, which is an important reason why non-farmers are not as good as expected.In terms of local government education employment, non-quarterly employment increased by 718000 in September, but decreased by 144000 after the quarterly adjustment. From the actual data, due to the epidemic disturbance after the quarterly adjustment of the employment data is no longer as stable as before the epidemic, but there have been large fluctuations. We believe that the epidemic has led to great changes in the pace of school recruitment, and conventional seasonal adjustment may be difficult to accurately assess the employment situation, or underestimated. For 161000 people in the education sector that did not take into account the reduction in government employment, non-farm employment increased by 355000, basically the same as the revised figure for the previous month.

The expiration of additional federal unemployment benefits has caused some unemployed people to withdraw from the labor market voluntarily, which is the main reason for the decline in both the unemployment rate and the labor force participation rate. The extra $300 a week in unemployment benefits expired on Sept. 5, forcing some of the "unemployed" who had previously received the extra $300 in benefits by reporting unemployment out of the labour market, causing both the unemployment rate and the labor force participation rate to fall. In addition, the expiration of unemployment benefits has also increased the motivation of some unemployed people to find work, which is also part of the reason for the decline in the unemployment rate.

Non-agricultural recovery is expected, and Taper is still on the string.

1）The epidemic has alleviated significantly since mid-late September, and the disturbance to October non-farm payrolls data is expected to be limited, and October non-farm payrolls data is expected to increase significantly.First, the data related to the epidemic in the United States have fallen since late September and the oral drug Monabiravir for novel coronavirus has appeared, which is conducive to further controlling the epidemic and boosting workers' confidence. Second, the current disturbance in the education industry may fade to a certain extent, the number of people in education after quarterly adjustment and the number of non-quarterly employment are close, and the factors of subsequent seasonal adjustment will be narrowed. Third, the additional subsidy is expected to promote the employment of residents when it expires. We expect the non-farm data to continue to recover in October.

2）The Fed's announcement of taper in November is still a high probability.There are three main reasons: 1) several officials, including Federal Reserve Chairman Colin Powell, have revealed that they are more focused on cumulative rather than monthly values for the employment recovery, and this month they also revised up non-farm payrolls in July and August, and the mobile average employment rose by more than 550000 in March. At present, most officials believe that the cumulative recovery in employment has reached the taper threshold; 2) wage growth continued to rise in September, after Powell acknowledged inflationary pressure in his congressional testimony, and inflationary factors will also promote Taper; 3) non-farmers were disturbed by factors such as the epidemic in September, but in fact they also contained some positive signals that they should not be pessimistic about future employment.

Table of contents:

Text:

1. The disturbance of the epidemic situation is still there, and the recovery of employment continues.

What happened: non-farm payrolls in the United States were lower than expected again in September. 194000 new jobs were created, while the non-farm payrolls data for July and August were revised upwards, from 38000 to 1.091 million in July and 131000 to 366000 in August. The unemployment rate is 4.8%, the previous value is 5.2%, the labor force participation rate is 61.6%, the previous value is 61.7%, the average annual hourly wage rate is 4.6%, and the previous value is 4.3%.

Short-term outbreaks disrupt US non-farm payrolls data in September. The statistical window for non-farm payrolls data is in mid-early September (including the week of December 12), when new confirmed cases in the United States have just begun to peak and remain high, disrupting the recovery of services such as Leisure Inn Hotel. But payrolls still rose by 70, 000, up from 40, 000 last month, and about 50, 000 in retail, transportation and warehousing.

The epidemic disrupted conventional seasonal factors, resulting in large fluctuations in the education industry, with a sharp decline in new employment in September after seasonally adjusted. In September, employment in the education sector was a major drag, with a total reduction of 161000 jobs in public education and 19000 in private education, mainly due to seasonal adjustments. In terms of local government education employment, non-quarterly employment increased by 718000 in September, but decreased by 144000 after the quarterly adjustment. The education industry has obvious seasonality due to the teaching cycle, but due to the disturbance of the epidemic, we think that this seasonal rule will be affected. From the actual data, the employment data after the quarterly adjustment is no longer as stable as before the epidemic, but there are large fluctuations, while the non-quarterly data maintain a good rule. We believe that the epidemic has led to a great change in the pace of school recruitment, and conventional seasonal adjustment may be difficult to accurately assess the employment situation, or underestimated. For 161000 people in the education sector that did not take into account the reduction in government employment, non-farm employment increased by 355000, basically the same as the revised figure for the previous month.

The expiration of additional federal unemployment benefits has caused some unemployed people to withdraw from the labor market voluntarily, which is the main reason for the decline in both the unemployment rate and the labor force participation rate. The weekly unemployment benefit of an additional $300 expired on September 5, causing some "unemployed people" who had previously received an additional $300 in benefits by reporting unemployment to withdraw from the labor market, resulting in a double decline in the unemployment rate and the labor force participation rate (labor force = employed + unemployed, unemployment = unemployed / labor force, labour force participation rate = labor force / total population). When the number of unemployed falls, the labour force participation rate decreases, while the numerator denominator of the unemployment rate decreases by the same amount, and the unemployment rate as a whole falls because the denominator is much larger than the numerator. Judging from the data, in the face of poor non-farm payrolls data, the number of registered unemployed in the United States still fell sharply in September, indicating that some of the unemployed voluntarily withdrew from the labor market, and although the number of registered unemployed also dropped sharply in July, the unusually strong non-farm payrolls data in July (1.09 million, an 11-month high) led to a decline in unemployment. In addition, the expiration of unemployment benefits has also increased the motivation of some unemployed people to find work, which is also part of the reason for the decline in the unemployment rate.

2. Non-agricultural recovery is expected, and Taper is still on the string.

The epidemic has alleviated significantly since mid-late September, and the disturbance to October non-farm payrolls data is expected to be limited, and October non-farm payrolls data is expected to increase significantly.First, the data related to the epidemic in the United States have dropped since late September, and recently there has been an oral drug Monabiravir for novel coronavirus, which has a good effect on moderate and mild patients and is conducive to further controlling the epidemic and boosting workers' confidence. Second, the current disturbance in the education industry may fade to a certain extent, the number of people in education after quarterly adjustment and the number of non-quarterly employment are close, and the factors of subsequent seasonal adjustment will be narrowed. Third, the additional subsidy is expected to promote the employment of residents when it expires. We expect the non-farm data in October to continue the recovery.

The Fed's announcement of taper in November is still a high probability, but the possibility of an official announcement increased in December. Although the monthly increase in non-farm payrolls in September did not reach the threshold of 500000, we believe that the announcement of taper in November is still a high probability event, mainly for three reasons: 1) several officials, including Federal Reserve Chairman Colin Powell, have revealed that they are more concerned about the cumulative value than the monthly value for the employment recovery, and this month they revised the non-farm payrolls data for July and August, and the average mobile payrolls increased by more than 550000 in March. At present, most officials believe that the cumulative recovery in employment has reached the taper threshold; 2) wage growth continued to rise in September, after Powell acknowledged inflationary pressure in his congressional testimony, and inflationary factors will also promote Taper; 3) as shown above, non-farmers were disturbed by factors such as the epidemic in September, but in fact they also contained some positive signals that they should not be pessimistic about future employment.

Source: Guotai Junan Securities.