Strong September jobs are anomalous as job demand concerns persist: Read By Investing.com

Investing.com — September’s strong jobs report caught many by surprise, putting the brakes on bets for another huge Federal Reserve interest rate cut, but Citi sees the strength as exceptional value as demand of work remains a concern.

“The details (D) of the September data leave us skeptical that this will be the case,” Citi analysts said in a note on Monday, expecting a “return to weaker dynamics at some point in the next few months “.

The September report showed 254,000 jobs added and the unemployment rate fell to 4.05 percent, but that may not reflect a resilient labor market, analysts said.

The strength could be the result of low labor market volatility influenced by seasonal adjustments, rather than actual demand for workers, which is likely to correct in the coming months.

On the supply side, the strong survey among households was largely driven by an unusually large increase in government employment, which analysts do not expect to see repeated.

Without that increase, the unemployment rate could have risen to 4.3 percent, highlighting potential fragility in the labor market, analysts suggest.

The 78,000 job growth seen in the leisure and hospitality sector, which accounted for nearly a third of all new jobs, comes as employment rates in the sector eased to levels seen in April 2020, signaling sustainability concerns. ”, the analysts said.

If, however, the incoming labor market data continues to reflect the strength of the September report, then it would confirm that the unemployment rate has stabilized at a low level, indicating a soft landing for the economy,

But Citi thinks that’s unlikely because its view of a weakening labor market “was based on trends seen in many different data sets,” suggesting that “September’s very strong jobs report looks like an outlier “.