Payrolls Report Keeps Fed Taper Timeline On Track

September sees a softer-than-expected nonfarm payrolls gain, but: +169K revisions to Jul and Aug combined w +194K in Sep, a drop in the unemployment rate to 4.8%, a longer avg workweek, and strong earnings growth mean that this can't be clearly be interpreted as a "weak" report.

• Even if it's not "strong", it should be enough to give the green light for a Fed taper announcement in November.
• The biggest negative factor was the unexpected decline in the participation rate to 61.6% vs 61.7% prior (and an uptick to 61.8% expected), which will concern some on the FOMC who are using that metric as their yardstick for labor market progress.
• Overall the September report doesn't allow for particularly clear analysis, with the BLS itself admitting that some aspects of the report are "challenging" to interpret
• But Chair Powell said last month the Fed didn't need a "knockout" Sept report to move forward with the taper, and today's numbers appear to meet the minimum threshold to move forward as planned (esp when combined with getting the debt ceiling crisis out of the way).