On Friday (8th), the United States released its September non farm employment report, which only added 194000 new jobs, far below the expected 500000 jobs and the lowest growth rate in nine months. The unemployment rate has dropped to 4.8%. Some analysts believe that the weak September report may still trigger the Federal Reserve's reduction plan, but may continue or suspend interest rate hikes. After the report was released, US stocks fell slightly, the US dollar remained roughly stable, and gold prices staged an "inverted V" trend.

Labor shortage, severe wage increase

Some analysts believe that the non farm sector in the United States was extremely cold in September, indicating that the COVID-19 epidemic and lack of workers still pose pressure on the economic recovery of the United States. According to statistics from Johns Hopkins University in the United States, the cumulative number of confirmed cases in the United States has exceeded 44.24 million, with over 712000 deaths.

Despite the weak total employment, wages have risen significantly. The report shows that companies are using salary increases to address labor shortages, with a 0.6% increase in the month pushing the year-on-year increase to 4.6%.

Andrew Hunter, a senior US economist at Kaitou Macro, said that due to labor shortages, wages are facing serious upward pressure. At the same time, the return of low-paid leisure and hotel industry workers should have lowered the average level.

US stocks and US dollars reacted coldly, while gold staged an "inverted V" market

At the time of the Federal Reserve's planned downsizing, a weak employment report suddenly appeared, which could have caused severe market volatility, but in fact, the market did not respond well to the news.

On the US stock market, all three major stock indices recorded a decline, but the magnitude was minimal. As of Friday's close, the Dow Jones Industrial Average was at 34726.25 points, down 8.69 points; The S&P 500 index closed at 4391.34 points, down 8.42 points; The Nasdaq closed at 14820.75 points, down 76.38 points.

In terms of the US dollar index, it briefly fell by about 20 points to a low of 93.95 in the short term, but then rebounded from a low point.

The volatility of gold prices is the most severe, with spot gold briefly rising by $20 to $1781.25, breaking through the $1780 level for the first time since September 22. However, it subsequently plummeted and gave up all gains, falling more than $20 from its intraday high.

Analysis suggests unobstructed reduction

Allianz Chief Economic Advisor Mohamed El Erian told Bloomberg on Friday that Federal Reserve Chairman Powell had clearly stated earlier that the test of reducing bond purchases this year has been reached.

Rick Rieder, Chief Investment Officer of BlackRock's Global Fixed Income Division, supported Mohamed El Erian's view in a report, stating that the test for the Federal Reserve is whether supply chain issues will continue into 2022 and how to respond to sustained high inflationary pressures.

Goldman Sachs stated that the lower than expected employment figures in September were due to the impact of the Delta variant virus. However, considering the decline in unemployment rate and positive salary data, it is expected that this report will not affect the Federal Reserve's announcement of a reduction and is expected to announce its plan at the November meeting.

However, some analysts have stated that the Federal Reserve has repeatedly emphasized distinguishing between "reduction" and "rate hikes," and even if the Fed maintains its reduction plan, weak non farm data may prompt them to delay or pause rate hikes.

The next FOMC meeting will be held on November 2nd and 3rd, and the non farm data for October has not yet been released. Therefore, whether the Federal Reserve will scale back its announced plan at its November meeting is crucial for this September non farm report.

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