The unexpectedly strong 254,000 gain in payroll employment in September was a welcome surprise, but the deterioration in most other labour market indicators suggests this was a one-off rather than the start of a genuine renaissance. Survey-based hiring indicators, hours worked and the decline in temporary employment all suggest that payroll employment should be increasing at closer to 125,000 per month. The upshot is that, while September’s strength has put paid to more 50bp rate cuts from the Fed, it should still continue with a more measured pace of policy loosening.
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