US payrolls grew by a lower-than-expected 156,000 in September and the unemployment rate rose from 4.9% to 5.0%. This headline all but clinches the status quo in the federal funds rate at least until the December FOMC meeting (there had been a few making noise for a November rate hike). The report showed a rise in the labor participation rate, meaning previously discouraged workers are starting to look for work again, which accounts for the higher unemployment rate. Other positives include a rise in the average workweek hours, from 34.3 to 34.4, and a 2-tenths uptick in average hourly earnings, bringing the Y/Y increase to 2.6%.

The ISM (Institute for Supply Management) manufacturing index showed a nice 2-point bounce in September, beating expectations and suggesting that August’s disappointing report was an anomaly. New orders rose a solid 6 points to 55.1, production improved by 1.4 points, as did employment. Export orders held steady at 52.0 and the draw in total backlog orders slowed. Overall, the report is positive and points to moderate strength in manufacturing.

The international trade deficit widened to $40.7B in August, an increase of $1.2B, but the report this week is more positive than it appears on its surface. Total exports rose 0.8%, while imports rose 1.2%. Both point to a growing economy. A healthy domestic demand was further evidenced by a $1.2B rise in capital goods imports. Capital goods exports fell $0.7B, which is the lowest drop in nearly 5 years; however, excluding aircrafts, capital goods exports rose slightly.