Non-farm employment data far below expectations, Bitcoin prices plummet significantly.
The 10 October non-farm employment data released by the U.S. Bureau of Labor Statistics on November 1 was surprising, with only 12,000 jobs added, far below the market expectation of 100,000 jobs, marking the smallest increase since December 2020. Meanwhile, the non-farm employment data for the previous two months was also significantly revised downward, with a total decrease of 112,000 jobs. However, the unemployment rate was unaffected, remaining exactly as predicted at 4.1%.
The main data is summarized as follows:
Name Published Value Forecast Previous U.S. Non-Farm Employment Change 12,000 106,000 223,000 Unemployment Rate 4.1% 4.1% 4.1%
Source: Investing.com The U.S. Bureau of Labor Statistics released unexpectedly poor non-farm employment data for October, with only 12,000 jobs added.
This news has raised market concerns about a slowdown in the U.S. economy, leading Bitcoin prices to fall sharply, once again dropping below $70,000, ending a week of upward momentum. As of the time of writing, the Bitcoin price is $69,783.
Source: TradingView Bitcoin prices experienced a brief rebound, but are now plummeting due to unexpectedly poor non-farm employment data.
Hurricanes and strikes are the main reasons for the decline in the employment market.
The sluggish employment data is mainly attributed to two major factors: hurricanes and large-scale strikes. At the end of September and the beginning of October, hurricanes Helene and Milton hit the southeastern United States, causing thousands of people to lose their jobs, severely impacting local economic activity. The Bureau of Labor Statistics indicated that the hurricanes may have reduced employment by up to 40,000 jobs.
In addition, the large-scale strike at Boeing significantly impacted the employment data. A total of 33,000 workers at Boeing's factories in California, Oregon, and Washington were laid off due to the strike, resulting in a decrease of 46,000 manufacturing jobs, the largest drop since April 2020. These temporary factors are considered the main reasons for the decline in the employment market.
Market expects the Fed to cut interest rates, investors' reactions are complex.
Despite the disappointing employment data, the unemployment rate remains at 4.1%, in line with market expectations. Average hourly wages increased by 0.4% month-on-month, slightly higher than the expected 0.3%, indicating continued wage pressure. The market generally expects the Federal Reserve (Fed) to lower interest rates by 25 basis points (0.25 percentage points) at its meeting on November 6-7, with the CME FedWatch tool showing that the probability of a rate cut in November has risen to 98.9%. The probability of another rate cut in December has also increased to 82.7%.
Source: CME FedWatch Market forecasts the probability of a 25 basis point rate cut in November skyrocketing to 98.9%.
Institutions like Goldman Sachs believe that the Fed may attribute the weakness in this data to one-off factors and continue to push forward with monetary easing policies. Investors reacted in a complex manner; U.S. stocks rose driven by strong earnings reports from tech giants like Amazon, while risk assets like Bitcoin faced setbacks and declined.
The performance of major U.S. stock indices is summarized as follows:
Dow Jones Index: Up 288.73 points, or 0.69%, closing at 42,052.19 points.
NASDAQ Index: Up 144.77 points, or 0.8%, closing at 18,239.92 points.
S&P 500 Index: Up 23.35 points, or 0.41%, closing at 5,728.8 points.
Philadelphia Semiconductor Index: Up 54.68 points, or 1.11%, closing at 5,001.43 points.
NYSE FANG+ Index: Up 122.24 points, or 1.05%, closing at 11,739.28 points.
Outlook: Economic uncertainty and investment strategies
Experts point out that the impact of hurricanes and strikes on employment data is temporary, and the economic fundamentals have not shown significant deterioration. However, the slowdown in the employment market may indicate increasing pressure on U.S. economic growth. Investors should pay attention to the upcoming U.S. presidential election and the Fed's policy meetings, as these events may have a significant impact on market trends. In the face of increasing economic uncertainty, investors should cautiously adjust their portfolios and focus on maintaining a balanced asset allocation to cope with potential market volatility and risks.
[Disclaimer] The market has risks, and investments should be made cautiously. This article does not constitute investment advice, and users should consider whether any opinions, views, or conclusions in this article align with their specific situation. Investing based on this is at your own risk.
