Home · Business · Oct 5 archive
US Jobs Growth Slows in September
Confirmed
In Short: The US economy added 29,000 jobs in September, a slower pace than expected.
The US economy added 29,000 jobs in September, a figure that fell short of economists' expectations of around 85,000 jobs, according to the Bureau of Labor Statistics report released Friday.
Private sector jobs increased by 46,000, but government payrolls contracted by 17,000, with federal, state, and local government jobs all seeing declines.
The report also showed that the number of people working part-time for economic reasons increased, indicating that some individuals would prefer full-time employment but were unable to find it.
In August, the ISM Employment Index had climbed slightly to 47.8 from 47.4, suggesting a mixed picture of hiring momentum.
The Federal Reserve remains concerned about inflation, which is still running above its 2% target, despite some recent easing.
White House Council of Economic Advisers Chair Chris Phelan said he does not expect the Federal Reserve to raise interest rates again this year, citing evidence that inflation and the labor market are cooling.
Phelan noted that the economy needs to add only around 40,000 jobs a month to keep the unemployment rate stable, and argued that the current unemployment rate represents a healthy labor market.
Fed policymakers, including Vice Chair Philip Jefferson and New York Fed President John Williams, have acknowledged that inflation remains too high but have signaled that they can afford to wait for more data before deciding on additional tightening.
Healthcare employment continued its upward trend in September, adding 17,000 jobs, though at a slower pace than the average monthly gain over the prior 12 months.
Manufacturing employment added 9,000 jobs, with increases in plastics and rubber products manufacturing and machinery manufacturing.
The Bureau of Labor Statistics revised down the total nonfarm payroll employment for July and August, reflecting additional reports received from businesses and government agencies.
What this adds
The September jobs report adds to the mixed signals the labor market has been sending, with some indicators showing resilience while others suggest a slowdown.
The ISM gauge for September, set to be released on Monday, could offer further insight into the resilience of the services sector and the broader economy.
Background
The flash S&P Global US Composite Purchasing Managers Index (PMI) rose to 58.4 in September from 56 in August, signaling a marked acceleration in private-sector activity.
What's confirmed
- The sector's gain of 35,000 jobs in August was revised up to a gain of 44,000.
What's still developing
- On Monday, we’ll get the latest read on the US services sector when the Institute for Supply Management (ISM) publishes its September gauge.
- If confirmed, the reading is unlikely to significantly dent the current sector’s resilience and confidence in the broader economy.
- In the same line, New Orders gathered decent steam, increasing to 60.9, which hinted that demand may be picking up pace.
- Inflation in the US is still running hotter than the Federal Reserve’s (Fed) 2% target, and that keeps policymakers uneasy, especially amid the still unresolved crisis in the Middle East and with the full effects of US tariffs yet to filter through the economy.
- It would simply confirm the picture of an economy that’s still resilient but still wrestling with sticky price pressures.
- Phil Camporeale, chief investment strategist at JPMorgan Wealth Management, said that the "combination of lower-than-expected jobs created, negative revisions to prior data and weaker wage growth are further evidence that the labor market is not a source of inflationary pressure."
- Seema Shah, chief global strategist at Principal Asset Management, discusses the September jobs report.
- "I think the job market's going well," Phelan said.
- Phelan pointed specifically to the Personal Consumption Expenditures price index, the Fed's preferred inflation gauge. Headline PCE inflation eased to 3.4% in August from 3.7% in each of the previous two months, while core PCE, which excludes volatile food and energy prices, slowed to 3% from 3.3% in July. Phelan said the three-month annualized rate of core PCE is running at about 2%, arguing that inflation was already moving in the right direction before the Fed's September increase. "So we are already making progress on inflation," he said. "It's coming down before they took any action."
- Economic Indicators • By Elise Gould • October 2, 2020 Today, the Bureau of Labor Statistics (BLS) reports an increase of 661,000 jobs in September, representing a notable slowdown in regaining the massive amount of jobs lost during the coronavirus pandemic.
- Further, nearly a quarter million jobs in September— 247,000 —were temporary jobs related to the decennial census that will disappear in the next few months.
- “Momentum indicators also suggest that further pullbacks are likely for now, although a technical bounce cannot be ruled out given that the Relative Strength Index (RSI) is around 17, while the Average Directional Index (ADX) near 40 indicates that the current trend remains robust," he concludes.