Munoz and Nir expect a relatively quiet US data calendar, with ISM Services likely slipping to 54.0 versus 55.0 consensus, modestly higher Jobless Claims, and a small decline in UMich Sentiment to 47.5. They note September payrolls moderated mainly on seasonal factors, while underlying labor-market strength and rising participation support a still-resilient backdrop.

Services survey and labor signals

“September payrolls surprised to the downside last week, but the details showed underlying strength. The moderation in job gains was largely driven by seasonal factors — especially in leisure & hospitality (LHS figure below). The 3m and 6m averages also show job gains within breakeven.”

“Meanwhile, the slight increase in the UE rate to 4.2% was for “good reasons” with participation and the employment-to-population ratio both rising.”

“ISM services likely reversed its unexpected August gain, falling to a below-consensus 54.0 in September. We expect the recently strengthening new orders and activity components to lead the reversal while employment likely improved for a second consecutive report — though we expect it to stay in contraction. Prices paid will also garner attention after rising the past two months.”

“Other key events this week includes a likely reversal in ISM services, decline in UMich (in line with last week’s negative consumer confidence), the NY Fed SCE, and some more Fedspeak (see calendar below).”

“This week will be quiet with a likely decline in ISM services, Fedspeak — with Waller the highlight, FOMC minutes, and UMich.”