TD: September Job Report "Enough For Tapering"

TD thinks the September jobs report was "not as disappointing as suggested by the 194k headline number. While the rate of increase in employment has slowed relative to earlier in the summer, likely due in part at least to fallout from the latest COVID wave, the pace is likely still sufficient for Fed officials to follow through on plans to announce tapering at the November FOMC meeting."

• However, the weaker jobs reading "should temper some of the enthusiasm for 2022 rate hike pricing".
• The recent pattern in earnings growth is "consistent with employers having difficulty finding workers".
• The weak participation rate should recover "over time", "helped by a fading of COVID fears, the expiration of supplemental unemployment benefits, and a shift back to in-person schooling (allowing parents to return to work), but those factors evidently did not fade significantly in September, probably due in part at least to the latest COVID wave."