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U.S. Jobs Report Disappoints

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The September non-farm payroll report from the Bureau of Labor Statistics (BLS) showed job gains of 154K for the month. This is below the roughly 170K expected by analysts, on average. The unemployment rate ticked up from 4.9% to 5.0%, as more U.S. citizens actively look for work.
Significant revisions to the previous two months were announced, as well: July’s 275K has been reduced considerably to 252K, yet August’s 151K is bumped up to 167K, for a net loss of 7000 jobs over those summer months. For September, 354K jobs have been added to the workforce, backing up the slight rise in unemployment percentage.
“Real” unemployment — referred to as the U6 in the BLS report — has remained unchanged at 9.7% for the past three months. Yet the Labor Force Participation Rate was up to 62.9% and 444K people have now gone back to work, so “full employment” — now clearly a relative term — looks to have more slack than was earlier assumed. This actually backs up what the Fed has been asserting: that U.S. employment has more room to run.
The three-month average is 192K jobs, indicating an overall slowdown in jobs creation, especially looking back through the past dozen quarters or so. This makes sense, too, considering that we are getting closer to full employment; there may be more “room to run,” but it won’t be as fast.
Average hourly earnings rose 0.2%, tallying 2.6% for the year. However, average hours worked has remained stagnant at 33.5 hours per week. This points to a key weakness in the current labor market: much of the work in the U.S. is less than full-time. Modern analyses of the “gig economy” would tend to bear this out.
As we saw in the ADP ADP private sector jobs report on Wednesday, Professional/Business Services carried most of the heavy lifting: 67K new jobs in the sector were created in September. Healthcare brought 33K and Restaurants 30K. Services far outweighing Manufacturing, but we knew that already. Overall, the BLS report posted 167K private-sector jobs.

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