Although the September increase in payrolls was smaller than many had expected, over the past three months we’ve seen an average of 550,000 jobs created, just down from the remarkable average pace of 567,000 per month in the first half of the year. At least part of the recent slowing in payroll growth seems to reflect a limited supply of labor.
Second, the effects of capital inflows, whatever their cause, on emerging market economies are not predetermined, but instead depend greatly on the choices made by policymakers in those economies. In some emerging markets, policymakers have chosen to systematically resist currency appreciation as a means of promoting exports and domestic growth.