Daily Brief: US Job Numbers Are A Serious Disappointment All Over Again. Your Move, Fed.

Daily Brief: US Job Numbers Are A Serious Disappointment All Over Again. Your Move, Fed.

over 2 years ago3 mins

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Data out on Friday showed that the US added just 194,000 new jobs last month, and it’s starting to feel like we’ve been here before…

What does this mean?

Economists had been hoping August’s disappointing jobs report was just a hiccup, but not quite: the US added just 194,000 jobs in September, the smallest monthly uptick of the year and well below economists’ predicted 500,000. And while the unemployment rate fell to 4.8% versus the 5.1% economists were expecting, it was partly because fewer people were going out for jobs in the first place. Still, at least there are a couple of straws the US government can clutch at: stay-at-home parents are more likely to start looking for work now that school is back in session, and the end of unemployment benefits should push more jobseekers into the market too.

Jobs

Why should I care?

For markets: What will the Fed do now?

The report has put the US Federal Reserve in a tricky spot: the central bank was planning to wind down its bond-buying program as soon as next month, but it may have to put that plan on hold if it doesn’t want to risk damaging a clearly less-than-stellar recovery. Stock market investors will be pleased, mind you: less bond-buying would push yields up, making stocks comparatively less attractive and sending prices down.

Strike two

The bigger picture: Lift the debt ceiling and raise da roof.

There was some good news for the US late last week: the government finally agreed to increase the amount of debt it could borrow to pay off its bills. Trouble is, the $480 billion increase only provides enough cash to last until the start of December, setting the scene for yet more uncertainty in less than two months’ time.

Keep reading for our next story...

Samsung Reported Its Highest Profit In Three Years

Samsung

Samsung reported its highest quarterly profit in three years on Friday, and the electronics giant is never going to want to forget these memory chip shortages.

What does this mean?

The world’s in seriously short supply of memory chips right now, which has sent prices skyrocketing. That suits Samsung just fine: it’s both the world’s biggest maker of memory chips and makes most of its money from that part of its business. Mix in strong demand for its other products, and its profit came in 28% higher last quarter than the same time a year ago.

Samsung profit

But that momentum sounds like it might not last: analysts are expecting Samsung’s profits to fall this quarter. That’s partly because the dwindling WFH boom means workers are buying fewer gadgets for their home offices, and partly because rising inflation is increasingly putting shoppers off pricey electronics. That might be why Samsung’s stock barely moved after the announcement.

Why should I care?

The bigger picture: TSMC gets in the holiday spirit.

TSMC – the world’s biggest contract chipmaker – is having a field day too: its revenue last quarter was 20% higher than the same time last year. That’s particularly impressive considering the company’s been focusing its resources on lower-priced chips for the carmaking industry, rather than more profitable ones for the tech sector. That, at a time when it’d usually be diverting more of its resources to help those companies build Christmas’s must-have gadgets.

Wait for chips
Source: Bloomberg

Zooming out: If it’s not chips, it’s ships.

Speaking of carmakers, Tesla said last week that the chip shortage was one of the biggest risks facing the company right now, and that it might get in the way of its ambitious goal to grow sales by 50% a year. But it’s not just chips threatening Tesla’s plans: a lack of cargo ships means the EV maker’s struggling to get parts delivered where they need them.

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