The labor market anomaly

Daily update

The US employment report has a wide range of estimates around the payrolls data. This is not surprising—labor market data precision is challenged by low response rates and structural changes in the way people work. The general expectation is for an OK report with stable unemployment.
The unanswered question is why a seemingly OK labor market is producing no real wage growth and a falling wage share in the economy. After months of higher inflation from tariffs and the Gulf war, US workers still struggle to get pay rises. The rising profit share of the economy may partly arise from self-employment and side hustles (which pay profits, not wages). But while the low wage growth is a positive signal for future inflation and cost pressures, the anomaly raises concerns about data quality.
Japan’s Tokyo consumer price inflation rose, generally because the local government stopped suppressing certain prices. Inflation from market forces was less aggressive. Flash September Eurozone inflation is due, with energy prices pushing prices up more than expected.
The Financial Times reports Ukrainian President Zelenskyy believes Russian President Putin ordered the Russian military to ignore the rules of war. Ukraine therefore seems very unlikely to stop attacking Russian energy infrastructure, however much US President Trump pleads.