US domestic data continues to look reasonable

In the US, economic data have taken a turn for the worse and financial conditions have tightened somewhat, despite the Fed's decision to stand pat last month. The September payroll report was weak on almost all fronts. 

Non-farm payroll growth slowed to 142K/m in September and averaged 167K/m in Q3, versus 230K/m in Q2. The unemployment rate fell modestly, to 5.05%, but due largely to the decline in the participation rate. Average hourly earnings were flat and the y/y print surprised to the downside at 2.2%. 

One bright spot was the fall in the U6 to 10.0% from 10.3%, which mainly reflected a reduction in the number of part-time workers.The normalized data surprises across sectors since the previous payroll report. Manufacturing has certainly been surprising to the downside, likely reflecting global developments. 

"On the other hand, real personal consumption growth is tracking almost 3.8% for Q3, following 3.6% in Q2. Overall, domestic data continue to look reasonable, though payrolls were certainly a setback", says Barclays.