On the September Jobs Report

Very large upward revisions to the prior two months make a beat out what looked like a big payroll miss. The labor force grew, with more than all new entrants employed, bringing the unemployment rate to a new cycle low. The monthly job-finding probability made a new cycle high, but it's still low by historical standards, suggesting there is still slack in the labor market. Payroll growth was disproportionately in higher-paying sectors. Yet hourly earnings growth fell, despite last month's growth being revised lower. There is nothing here to make the Fed worried about Phillips Curve pressures. Along with other continued evidence of sustained growth, such as Wednesday's ISM non-manufacturing report, it supports the higher long-term bond yields that are finally fulfilling our long-standing expectation.