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Giving back some of yesterday's CPI rally

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Payrolls As Expected With A Hawkish U/E Rate Tilt

US DATA
  • Payrolls growth from the establishment survey was extremely close to consensus in September, rising 263k (cons 255k) with only +11k of revisions, led by the private sector rising +288k.
  • AHE growth was at the margin slightly softer than expected: it increased 0.3% M/M (cons just had 0.3% in a split with 0.4%) after the same pace in Aug (revised slightly softer to 2.d.p), confirming a minor moderation in trend wage growth to a still strong nominal rate but likely not keeping up with core CPI inflation.
  • The household survey had more hawkish implications: the u/e rate fell from 3.65% to 3.49% (consensus torn between 3.6-3.7%), close to the joint-historical low of 3.46% in July, along with a 0.3pt drop in the underemployment rate to joint lows of 6.7%.
  • This was helped lower by a decline in the participation rate to 62.3% in a pullback after August’s jump to a year-to-date high of 62.36%. The emerging trend of a levelling out in overall participation below pre-pandemic levels keeping the labour market historically tight, and one that doesn't yet show signs of an upward drift in u/e rate towards the 3.9% the median FOMC member expects for end’22.

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  • Payrolls growth from the establishment survey was extremely close to consensus in September, rising 263k (cons 255k) with only +11k of revisions, led by the private sector rising +288k.
  • AHE growth was at the margin slightly softer than expected: it increased 0.3% M/M (cons just had 0.3% in a split with 0.4%) after the same pace in Aug (revised slightly softer to 2.d.p), confirming a minor moderation in trend wage growth to a still strong nominal rate but likely not keeping up with core CPI inflation.
  • The household survey had more hawkish implications: the u/e rate fell from 3.65% to 3.49% (consensus torn between 3.6-3.7%), close to the joint-historical low of 3.46% in July, along with a 0.3pt drop in the underemployment rate to joint lows of 6.7%.
  • This was helped lower by a decline in the participation rate to 62.3% in a pullback after August’s jump to a year-to-date high of 62.36%. The emerging trend of a levelling out in overall participation below pre-pandemic levels keeping the labour market historically tight, and one that doesn't yet show signs of an upward drift in u/e rate towards the 3.9% the median FOMC member expects for end’22.