“The September jobs report was mixed but still solid, as the downside miss in payrolls was due in part to Hurricane Florence and came after substantial revisions of +87k,” note TD Securities analysts.
Key quotes
“Payrolls came in at 134k, reflecting particular weakness in retail trade (-20k) and leisure and hospitality (-17k) “” although goods employment was relatively strong last month, particularly in construction (+23k), another typically weather-sensitive sector. The BLS reported no unusual drop in the survey response rate due to the hurricane, while the 299k unable to work due to bad weather was somewhat higher than the historical average of 85k for September “” but short of much larger prints associated with other big storms. Stepping back, the remaining industries showed solid monthly growth and thus the weaker September print looks to us to likely be a one-off miss.”
“Average hourly earnings posted another solid increase of 0.3% (0.2946% unrounded), with a small downward revision to the prior month’s m/m print that left it at 0.3% instead of the initial 0.4%. As a result, the y/y growth rate slipped to 2.8% (2.7537% unrounded), down slightly from 2.9% in August as expected. One note of caution though is that the hurricane may have biased the September figure upward. Therefore it is too soon to tell if wages are rising meaningfully out of previous ranges and toward 3%.”
“The drop in the unemployment rate to a new cycle low of 3.7% (3.683% unrounded) was due to a strong increase in household employment (+420K) that reversed the decline last month and overwhelmed a modest increase in the labor force (+150K). The participation rate held steady at 62.7%. This was not mirrored in broader measures of slack, as the U6 rate ticked higher to 7.5% due to a pickup in involuntary part-time work (which nearly erased its improvement in the prior two months). In addition, prime-age participation moved lower to 81.8%, a four-month low.”
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