US Economic Weekly: Labor markets remain resilient

We expect headline NFP growth remained strong at 130k in September. With labor market fundamentals improving through the month, we expect the unemployment rate ticked down to 4.0%. Overall, a resilient labor market should keep the Fed focused on inflation. The BEA's annual update is likely to lower July 2026 y-o-y core PCE inflation by about 15bp to 3.19%, reflecting methodological changes, source data revisions, and updated seasonal factors. Fedspeak this week suggests further policy tightening is likely. However, comments from both hawks and doves suggested little urgency for an October hike, with gradual tightening likely the preferred path for most policymakers. S&P PMIs strengthened to multiyear highs across sectors, while core capital goods orders suggest capex momentum is likely to continue. Our Q3 GDP tracking estimate stands at 4.1% q-o-q ar.