Underwhelming US jobs growth add to the case for an October rate cut

Highlights:

• In September payrolls grew by 136k, some 10k below expectations. Employment contracted slightly in the manufacturing sector. However data for the summer were revised up
• While job growth is still consistent with falling unemployment (the unemployment rate fell to a 50-year low of 3.5%, better than expected), the data add to the evidence of a slowdown of the economy, just after the disappointing September ISM readings.
• The sharp deterioration in the outlook since the FOMC met in September has in our view tilted the balance in favor of another cut, which we expect at the October 30 meeting.

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