US labor market cooled in September

September payrolls missed expectations, with significant downward revisions for July and August. This weakness spurred a rally in stocks and pushed back Fed rate hike forecasts to December.

However, the underlying labor market appears stronger than the headline number suggests. Household employment, participation rates, and wage growth all showed positive trends. Seasonality issues, particularly the later Labor Day, likely depressed the September figures.

We should watch for upward revisions next month. The Fed's next move now hinges on further economic data, not just this single payroll report.