US non-farm payrolls fall a little short of forecasts, but hiring is slowing

According to the Department of Labor, non-farm payrolls grew by 661,000 in September, undershooting forecasts for an increase of 865,000.

Offsetting the miss versus economists' median forecast, figures for the prior two months combined were revised up by 145,000.

Nevertheless, last month's reading was noticeably lower than the July print of 1.734m new hires and the August figure of 1.37m.

Unemployment meanwhile did surprise to the downside, falling from 8.4% to 7.9% (consensus: 8.2%), beating forecasts by a hefty margin.

But here too there were some important negatives, as the drop was the result of people falling out of the labour force, by some 695,000.

One small positive possibly was the fact that private sector payrolls did come in at 877,000, besting projections for a rise of 850,000, although in July and August they had been running at 1.53m and 1.022m, respectively.

Average hourly earnings were up by 0.1% on the month (consensus: 0.2%).

"Momentum fading; October will be much weaker," said Ian Shepherdson, chief economist at Pantheon Macroeconomics.

Shepherdson was also very cautious regarding the chances of a fourth stimulus bill making it past Congress any time soon.

"If Congress fails to pass a relief bill before the election, such grim data ought to motivate them to act in the lame duck session, but if Republicans have lost the Senate and WH, they might prefer to do nothing, rather than give incoming President Biden a lift.

"In that case, the next relief bill won’t be until February, and that’s a long way off."

For her part, Kathy Bostjancic at Oxford Economics told clients: "Job growth is moderating just as fiscal aid is expiring – a toxic cocktail.

"[...] The slowing momentum in the labor market bodes poorly for the broader recovery and points to increasing scarring effects from the crisis. Of key concern, the share of permanent unemployed rose from 30.6% to 35.6%, while the share of temporary unemployed fell to 36.7%."

-- More to follow --