U.S. Employment Rises Much Less Than Expected In September

Ivan Schwartz
October 8, 2018

The U.S. economy added 134,000 jobs in September below analysts' expectations while the unemployment rate was 3.7 percent, the lowest since 1969. Economists are questioning whether an economy at a 3.7 unemployment rate will be able to add that many jobs in the next 12 months.

In September the United States unemployment rate fell to 3.7% compared to 3.9% in July. There were strong upward revisions to prior months and a larger than expected drop in the unemployment rate.

The broader measure of labor underutilization, U-6, which measures the total unemployed plus marginally attached workers along with part-time workers for economic reasons, is at 7.5%, near its all-time low of 6.8% recorded in 2000.

There is little sign that President Donald Trump's trade wars could threaten the recover as manufacturing added 18,000 jobs.

Job gains were noted in healthcare, up 26,000, transportation and warehousing, up 24,000, and construction, up 23,000.

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The growth in the number of jobs observed 96 months in a row. With the bigger than expected decrease, the unemployment rate fell to its lowest level since hitting 3.5% in December of 1969.

Employees temporarily left unable to work during natural disasters can be left off the government's monthly jobs survey, especially part time workers who receive no pay during the week of the survey, meaning figures can rebound in the month after a storm.

Wall Street closed down sharply following the news, extending losses from Thursday's selloff due to a sudden jump in bond yields.

And many analysts see the unemployment rate continuing to decline this year, ramping up pressure on wages and prices. Often when wages increase, employers may begin to use more automation or equipment to reduce human labor requirements. The combination of gains in employment and moderate increases in wages is lifting disposable incomes. Fundamentally, however, I expect robust payroll growth of 205,000 and earnings growth of 2.8 percent year-over-year, which should mean an extra 8 cents an hour for workers.

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