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Data released today showed that non-farm payrolls rose by 136K jobs in September, below expectations but analysts at Wells Fargo point out that upward revisions and a drop in the jobless rate to a 50-year low suggest the labor market is not falling off the rails.

Key Quotes:  

“Signs that the economy is losing momentum beyond the factory sector are mounting, but the labor market is not falling off the rails. Employers added 136K new jobs in September, which was below market expectations but strong relative to the dismal readings on hiring in both ISM reports earlier this week.”

“September’s job figures add further evidence that the trend in hiring continues to slow. We expect private sector job growth to remain on a downward trend in the coming months. Other labor market indicators show no signs of demand improving.”

“As the trade war rages on, hiring in the manufacturing sector has continued to weaken (-2K).  

“Even with a slower pace of hiring in recent months, the labor market remains tight. The unemployment rate fell to a 50-year low of 3.5%. The drop was driven by a surge in the household measure of employment, rather than an exodus of job seekers from the labor force. The best BLS measure of under-employment, the U6, fell to 6.9%, only a tick above the lowest reading in the 25-year history of the series.”

“Average hourly earnings stalled in September despite signs of a still-tight labor market, but the flat reading comes on the heels of last month’s above-trend print. Through the noise, it looks like wage growth remains stuck in its recent range.”

“Another rate cut before year-end looks increasingly likely, with the odds rapidly rising that it will come as soon as the FOMC’s next meeting on October 30.”