1. Let’s start with Friday’s jobs report. While the headline figure was below the consensus forecast, the underlying labor market trends remain strong.
• The total number of new jobs created was relatively soft, especially in the private sector (second chart).
• Prime-age labor force participation and the employment-to-population ratio rose sharply as higher wages encourage more workers to step off the sidelines.
Labor force participation among prime-age US women hit the highest level since 2002.
The trends in prime-age vs. total labor force participation continue to diverge.
• The unemployment rate among African-Americans hit a record low (going back to the early 1970s when the Labor Department started tracking this series).
• Temp payrolls, which tend to be a leading indicator for the overall job market, jumped in August.
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2. Soft headline employment figures sealed the widely expected rate cut by the Federal Reserve this month. However, the market no longer expects a 50 basis point rate reduction.
4. The divergence between services and manufacturing PMIs (measures of business activity) has been dramatic. As Longview Economics points out, this gap is also present in the US and Japan.