The September US employment report turned in a much stronger jobs creation and a lower unemployment rate, uplifting the labor outlook, UOB Group Senior Economist Alvin Liew notes.
Jobless rate improves, wage growth accelerates
“Job creation was well above expectations at 254,000 in September and received an added lift of 72,000 upward revision to Aug/Jul numbers. Unemployment rate eased for a second month to 4.1% as unemployed numbers fell by -281,000 while participation rate stayed steady at 62.7%. Wage growth reaccelerated above forecast to 0.4% m/m, 4.0% y/y in Sep, meaning wage-push inflation is still a concern.”
“Job creation in the first 3 quarters was still at a slower pace (compared to the prior three years), but the base of job creation among the sectors turned broader in September with just manufacturing, and warehousing and transportation sectors losing jobs.”
“The September jobs data does not justify calls for a bigger rate cut, especially if we consider the improvement in unemployment rate and the pickup in wage growth. Thus, we keep to our forecast of a 25 bps Fed rate cut in Nov FOMC, but we acknowledge the balance of risk has shifted slightly towards pause. Wed’s September CPI will further shape Fed expectations.”
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