Nathan Janzen, the senior economist at the Royal Bank of Canada (RBC) notes that U.S. September labour market report was a mixed bag, but wasn’t as bad as might have been feared after softer-than-expected ISM manufacturing and non-manufacturing reports this week raised concerns about the health of the underlying growth backdrop.

• “The 136k increase in employment is still slower than the 200k+ readings we have become accustomed to in recent years. But it is still a strong enough pace to put downward pressure on the unemployment rate. And an upward revision to the job count in August (to 168k from 130k previously) also makes recent trends in the often-volatile data look a little better.
• Indeed, the unemployment rate fell to a new cycle-low 3.5% in September, and initial jobless claims data has not flagged any evidence of rising layoffs. Tight labour markets are a reminder that, even without escalating international trade concerns, slower employment growth would be expected given the shrinking pool of workers available to hire from.
• Wage growth was arguably the largest soft spot in the monthly report, slipping back below 3% on a year-over-year basis. But on balance, the data still leaves US labour markets looking relatively solid, at least for now.”