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MNI US Payrolls Preview: AHE Seen Re-Accelerating, Troubling Fed Target

Executive Summary

  • Consensus looks for payrolls growth of 170k in September. While industry-specific blips may occur, headline aggregates are not expected to be impacted by either the actors’ strike, or the walk-out of UAW workers currently impacting Ford, GM and Stellantis.
  • While headline change in nonfarm payrolls should not be impacted by the cross-sector strikes, hours worked across the manufacturing sector could come under marginal pressure. Wages are seen re-accelerating to 0.3% M/M, a level that remains inconsistent with the Fed hitting their inflation target in the near-term.
  • Unemployment rate expected to re-correct lower, after August’s 3.80% was largely down to technical factors.
  • Markets continue to discuss the higher for longer narrative and assess odds of an economic soft landing. Terminal rate pricing is shy of recent hawkish extremes, operating a little above the 5.45% mark, equating to the market pricing 50/50 chances of one further hike in the current cycle.

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