The September Employment Report confirms above-trend economic growth -- but some of the components likely reflect temporary factors.
A more-than-seasonal drop in summer jobs may very well have been behind the below-consensus +134k m/m increase in Payrolls. There were declines in Retail and Leisure jobs, possibly as students returned to school. The Household Survey showed a decline in teen-age employment.
A drop in low-paid summer jobs, as well as calendar considerations, likely contributed to the 0.3% m/m increase in Average Hourly Earnings. Unwinding of these effects should help hold down AHE next month. Calendar considerations point to a 0.1% m/m increase in October. However, the y/y would rise to 2.9-3.0% because AHE fell m/m in October 2017.
The drop in the Unemployment Rate to 3.7% from 3.9% in August confirms above-trend growth. A broader measure of labor market utilization, however, rose to 7.5% from 7.4%, suggesting there is still slack in the labor market.
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