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Real Time Insight

Inline with expectations, we got 114K jobs in September. This compares to 142K in August, which was revised higher from the originally reported 96K tally. In fact, revisions were broadly positive, with both August and July tallies revised higher. However, the revisions seem to be primarily on the government payroll side, with government jobs turning positive for the first time in this labor market recovery.
In addition to the positive revisions, the unemployment rate fell below the 8% level for the first time since 2009 – to 7.8% in September from 8.1% in August. Very strong gains in the Household survey drove the drop in the unemployment rate. The Household survey showed 873K jobs added in September, after several months of tepid gains. The Household survey, which is relatively more volatile on a month to month basis, is used to determine the unemployment rate, while the Establishment survey produces the headline job gains numbers.

In other details,  manufacturing lost 16K jobs in September, compared to 22K jobs lost in August, while service sector jobs totaled 114K, compared to job gains of 119K in August and 143K in July. The manufacturing decline is particularly worrying as the factory sector was consistently adding jobs in this recovery, but seems to have lost steam lately even though the latest ISM survey showed a rebound. The average workweek ticked up to 34.5 hours from 34.4 hours last in August, while average hourly earnings increased $23.58 from $23.51 last month.

In our politically heated backdrop, the report has something for everyone – different parts of the report can spun to suit the partisan’s views. But political spin aside, this is a net positive reading for the market, even though it’s not materially different from what we have been seeing in recent months. The key positives are in the drop in the unemployment rate and the positive revisions to the preceding two months.

What positives, if any, do you see in this report?

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