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A Solid, Not Spectacular Jobs Report

A solid though not spectacular September Employment Report suggests the economy is maintaining positive momentum heading into the fourth quarter. Accelerating wage gains on top of a good pace of jobs growth should provide support for further increases in consumer spending in the final quarter of the year.

Economic growth should be stronger in the second half of 2016 compared to the first half, though growth is still likely to be moderate by historical standards.

Mostly favorable data in this report and other economic reports make a December rate hike probable. However, the Fed is likely to continue on a path of only very gradual rate increases in the future.

Here are some highlights from the report:

The September Employment report showed strength, with the economy adding 156,000 jobs for the month; 167,000 from the private sector. The three-month average stands at 192,000 jobs per month while the 12-month average is 204,000.

Increases in payrolls were led by private services (+157,000), especially Professional & Business Services (+67,000), Education & Health Care (+29,000), Retailing (22,000), and Leisure and Hospitality (+15,000).

Goods producing industries gained 10,000 with manufacturing down 13,000, construction up 23,000, and mining unchanged.

Wages were up 0.2 percent for the month and 2.6 percent rate over the past 12 months. The length of the average workweek increased to 34.4 hours from 34.3 hours in August.

When hours are combined with payroll gains and wages, the index of aggregate weekly payrolls, a proxy for take-home pay, rose a strong 0.7 percent for September and is up 4.3 percent over the past 12 months – good news for consumer spending.

The unemployment rate ticked up to 5.0 as 444,000 people entered the labor force, pushing the participation rate to 62.9 percent.

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