Source: Economics Group of Wells Fargo Bank, N.A.
Summary
The September employment report was strong across the board. Nonfarm payrolls jumped by 254K in the month, the hottest reading since March, and job growth in August and July was revised higher by a cumulative 72K. Coming into today, the three-month moving average on monthly nonfarm payroll growth was 116K. Today’s print, when paired with the upward revisions, pushes the three-month moving average up to a much more robust 186K. The separate household survey from which the unemployment rate is derived also showed signs of a labor market that is coming into balance rather than collapsing. Employment as measured by the household survey outpaced growth in the labor force, pushing the unemployment rate down by one-tenth to 4.1%.
Today’s employment report is welcome news and suggests that the soft readings over the prior few months were not a sign of an imminent and sharp increase in unemployment. That said, one point does not make a trend, and there is still plenty of evidence to suggest that the labor market is cooling.