Weekly Signal & Noise Filter

The Quiet Part was said Out Loud

With the labor market rebounding from the summer growth scare, the consensus has finally accepted the soft landing of the economy.

Unrounded, the U3 unemployment rate came in at 4.051%.  For Pinebrook, the upward revisions to the prior two NFP prints, by +55k and +17K for July and August, respectively, were also noteworthy as the revisions fit neatly into our inflection/acceleration approach to watching the data.

Internally, the following sectoral job gains (assuming they are not revised away) are highly leading of the cycle and reinforce the view of these pages of a growth impulse in Q4. 

• Construction jobs increased by 25k.

• Residential construction jobs increased by 2k for another post-pandemic high.

• Goods producing jobs - which typically decline before recessionary vibes take hold - rose by 21k to a new expansion high. 

There are, however, other cyclical sectors that are underperforming.

• Manufacturing jobs declined by 7K

• Within manufacturing, automotive manufacturing declined by 6,500 jobs.

Still, this jobs report is scored as an unequivocal win for the economy.

The September labor market turnaround is the noise we all have heard throughout weekend. 

The signal is in what is happening with the real economy today, where is it likely going tomorrow, and what is the Fed’s most likely reaction function.

The Economy Today & Tomorrow