We estimate non-farm payrolls increased 160,000 in September, below consensus of 170,000 , but slightly higher than the job growth of 151,000 in August. In September, signals on employment growth are mixed. Initial claims figures still suggest employment growth well above 200,000 while the Markit PMI employment index only suggests job growth just above 100,000. Employment growth is estimated to be mainly driven by the service sector, with an estimated gain of 120,000 jobs. Manufacturing employment is estimated to stay unchanged after a decline of 14,000 in August and construction employment is anticipated to have risen by 20,000 jobs.
Employment growth slowed in August as expected after two months with very strong job growth. This still leaves the average job growth over the summer at solid 230.000 per month. However, one has to take into account that the strong employment growth came after a very weak spring. Hence, whether the labour market have tighten further in 2016 is questionable. The unemployment and underemployment rates have moved sideways for some time suggesting that there still slack left in the labour market. Average hourly earnings have also moved sideways throughout 2016, suggesting the same. We estimate the unemployment rate was unchanged at 4.9 % in September. With respect to average hourly earnings, we think they rose 0.3 % m/m in September, implying a wage inflation rate at 2.6 % y/y.
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