Solid labor market leaves spotlight on inflation for the Fed

… <ul type="disc"> <li>Payrolls rose by 162k in August and the unemployment rate was unchanged at 4.1%.</li> <li>Despite broad-based strength in the report, there is still little sign of renewed wage pressure in the data that would concern the Fed.</li> <li>Seasonal distortions, related to the World Cup events, may have exaggerated the strength in the leisure and hospitality payrolls in August. Hence, the underlying trend remains one of modest positive job growth.</li> <li>While payroll gains in manufacturing and construction are encouraging, future increases in healthcare and state and local government jobs may become hard to sustain in 2027.</li> <li>Indeed, Medicaid cuts begin taking effect in Q4, and with much of recent job growth concentrated in health care and state and local government, the resulting pressure on hospitals and state budgets could slow payroll growth.</li> …