Sept Payrolls rose 114k, in line with expectations but the private sector gains were a muted 104k, 26k less than expected. Aug headline was revised up by a large 46k but the private sector was revised lower by 6k. The private has only added 105k on avg over the past 6 months. This said, there was a huge 873k increase in the household survey, exceeding the 418k increase in the labor force, resulting in a drop in the unemployment rate to 7.8% from 8.1%, the lowest since Jan ’09. The U6 rate however remained unchanged at 14.7%. Hours worked ticked up .1 to 34.5 and avg hourly earnings rose .3% m/o/m and 1.8% y/o/y about in line with expectations. The participation rate rose a touch to 63.6% from 63.5% but the avg duration of unemployment rose to 39.8 weeks from 39.2. Manufacturing lost 16k, the 2nd straight month of losses. Construction added 5k. Within the service sector, retail added 9k, financial 13k, education/health 42k with a 2k job loss for temp. At the Govt level, federal and state added workers somewhat offset by a drop in local. Bottom line, the largest increase in the household survey since 2003 is the main focus of the markets due to the drop in the unemployment rate that it caused, thus putting aside the lackluster gain in private sector payrolls for the 2nd straight month. Also, just as we saw yesterday in the action of certain stocks post debate, we’ll see how things trade today with election influences of an unemployment rate back below 8%.

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