Labor gains

But I think it's fitting that we're opening with a discussion of labor because we had a blockbuster jobs number on Friday.

Yeah, it was a real surprise, the sheer strength of the headline number, at least.

It was three times what markets had expected.

It came in at 162,000 new jobs for August.

And the rest of the report was also pretty strong, it has to be said.

We had upward revisions of previous months, so that kind of softness that people had worried about in July suddenly was revised away magically.

And we had an increase in the participation rate, which is another fact that people had been watching closely over recent months about whether that was ebbing for all sorts of reasons related to demographics and other things.

But also from sector to sector, types of jobs being created were quite broad based, not just in the healthcare sector, which had been the case earlier in the year.

So there wasn't a great deal to dislike about it, except if you're watching interest rate markets, which is where I think a lot of people quickly switch to.

Yeah, and we'll

obviously be getting CPI at the end of this week.

So next week we have a Fed meeting coming and there's a high probability that we could get a rate hike.

And this suggests that maybe that really will occur.

I think what the Fed will read from the whole report is that it's right to consider the labour market as something that it needs to par for the time being.

There's no problem in the labour market.

It's pretty stable, whichever way you look at it.

So it then looks to the other side of its mandate.

It looks to inflation as being the decider for what it does with policy next.

And as you say, the CPI on Friday will be the be-all and end-all, I think, for anyone who's still wavering within the FOMC.

Interestingly, though, the White House hasn't changed its view on what should happen.

And there was a sort of bizarre intervention from President Trump shortly after the payrolls report where he yet again, you know, insisted that the Fed should be cutting interest rates and that U.S. interest rates should be the lowest in the world.

This is his take on it.

but then twinned it with the idea that if the Fed didn't cut interest rates, he would cut off trade with countries that had surpassed with the United States.

Now, a lot of people have looked at that and tried to figure out the logic of it.

And I don't think anybody really succeeded.