Hiring Steady As Employers Add 136,000 Jobs; Unemployment Dips To 3.5% | Connecticut Public Radio
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Hiring Steady As Employers Add 136,000 Jobs; Unemployment Dips To 3.5%

Oct 4, 2019
Originally published on October 4, 2019 10:58 pm

Updated at 10 a.m. ET

U.S. employers added 136,000 jobs in September — a sign of continued resilience in the labor market amid growing signals that the economy is losing steam.

The unemployment rate fell to 3.5% — the lowest since December 1969 — but the pace of hiring has slowed from last year. The jobless rate was 3.7% in August.

Job gains for the two previous months were revised up by a total of 45,000.

"We were on high alert for the risk of a nasty surprise, which didn't materialize," said Mark Hamrick, senior economic analyst at Bankrate.com.

An index of manufacturing activity released on Tuesday showed the factory sector contracting for the second consecutive month. Factories shed 2,000 jobs in September.

Don't see the graphic above? Click here.

The much-larger services side of the economy continued to grow in September but at a significantly slower pace. Private sector employers added 114,000 jobs during the month.

"The air continues to come out of the labor market, but it has not totally deflated," said economist Nick Bunker of Indeed Hiring Lab.

While government agencies added a total of 22,000 jobs, only 1,000 were temporary census workers. In August, the Census Bureau hired 25,000 temporary workers.

Retailers continued to cut jobs, losing more than 11,000 in September.

"Amid this narrative that the weakness is concentrated specifically in the manufacturing sector, it's now clearly spread to other parts of the economy," said senior economist Tim Quinlan of Wells Fargo Securities.

Factories are especially sensitive to global forces, including the trade war. But mounting tariffs have also taken a toll on consumers' confidence.

"To the extent that they start scaling back their outlays, not just on goods that are impacted by the tariffs but also any of their other service-related spending, that's now having a knock-on effect in the broader services economy," Quinlan said.

Average hourly wages over the past year have increased by 2.9%. That's down from 3.2% in the 12 months ending in August.

"The best of wage growth may have already been seen during this economic expansion," Hamrick said.

"We're not seeing as much movement in wages as we'd want," said Becky Frankiewicz, president of the temporary services firm ManpowerGroup North America. "Given supply and demand, we'd expect to see more."

Don't see the graphic above? Click here.

Job gains and economic growth have downshifted from a year ago. The economy grew at an annual rate of just 2% in the second quarter. And forecasters say growth in the just-ended third quarter may have been even lower. Monthly job gains over the past three months have averaged 157,000, compared with an average of 189,000 jobs in the same period a year ago.

The labor force participation rate held steady in September at 63.2%.

Quinlan is not projecting a recession, but he does expect growth to slow to an annual pace of just 1.5% over the next few quarters — barely above stall speed.

"It certainly feels like we're getting closer to that razor's edge," he said. "I get the sense a lot of financial market participants are just waiting for that next shoe to drop."

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AUDIE CORNISH, HOST:

It's been another wild week on Wall Street. The Dow Jones Industrial Average tumbled more than a thousand points in two days earlier this week, but today the market gained some of that back. In fact, the Dow surged more than 370 points after the Labor Department reported the lowest unemployment rate in nearly 50 years. So the job market keeps chugging along despite signs that the overall economy is slowing. NPR's Scott Horsley is here to tease it out for us. Welcome back to the studio.

SCOTT HORSLEY, BYLINE: Good to be with you, Audie.

CORNISH: We've been talking about low unemployment for a long time, and today we learned it's even lower. So help us understand what's happening.

HORSLEY: Audie, let me take you back to December 1969. That's how far back you'd have to go to find an unemployment rate as low as we've got right now.

CORNISH: Oh, we're really going back.

HORSLEY: Three and a half percent. That's right. Diana Ross and The Supremes were topping the charts.

(SOUNDBITE OF SONG, "SOMEDAY WE'LL BE TOGETHER")

DIANA ROSS AND THE SUPREMES: (Singing) Someday we'll be together.

HORSLEY: Today's report was supremely good when it comes to the unemployment rate. But the jobs picture, Audie, that was a little bit less rosy.

CORNISH: OK, so why? And what are we seeing on the jobs front?

HORSLEY: Employers added 136,000 jobs in September. That's certainly not bad after nearly nine years of steady job growth. We also learned that job gains in July and August were a little bit stronger than initially reported. But Chief Economist Constance Hunter, who's with the big accounting firm KPMG, says even when you add in those extra jobs, we're still seeing a slower pace of hiring now than we were at this time last year.

CONSTANCE HUNTER: A large number of people are employed, which is in part a function of the length of the expansion that we've had. But under the surface lurk some concerns.

HORSLEY: Those concerns include not only slower job growth, but we also saw a bit of a slowdown in wage growth last month. Average wages rose just 2.9% in September. And if you combine slower job growth with smaller pay raises, you could eventually see a slowdown in consumer spending. That would be worrisome because right now it's the U.S. consumer who's been the strongest pillar propping up the economy at a time when business investment and global demand has been waning.

CORNISH: Now, we mentioned the big stock selloff earlier this week. What's triggered that? And don't set it to "Old Town Road." We're here now.

(LAUGHTER)

HORSLEY: We got a report on Tuesday that showed manufacturing activity had shrunk for the second month in a row. Factories are definitely feeling the fallout of the president's trade war as well as slumping demand in other countries. We saw another 2,000 manufacturing jobs disappear last month. We're also seeing some signs of a slowdown in the services side of the economy which employs a lot more people, everybody from stockbrokers to nurses to truck drivers. Services are not contracting like factories are, but they are growing more slowly, and you can see that in the jobs numbers as well.

CORNISH: What's behind the rebound in stocks then?

HORSLEY: Some investors may be looking at this jobs report and breathing a sigh of relief that we're not slipping into a recession. Others could be betting that the Federal Reserve will look at this jobs report, see some weakness and decide it's time for another cut in interest rates. Either way, Wall Street wins. Fed Chairman Jerome Powell was speaking here in Washington earlier today. And while he didn't tip his hand on interest rates, he did say that he and his colleagues are committed to keeping this economic expansion alive as long as they can.

(SOUNDBITE OF ARCHIVED RECORDING)

JEROME POWELL: People from low and moderate income communities tell us that this long recovery - now into its 11th year - is benefiting them and their neighbors to a degree that has not been felt for many years. And people who have struggled to stay in the workforce in the past are getting new opportunities.

HORSLEY: Strong job growth has been pulling people off the sidelines, including, Audie, people without a high school degree, for example, people who have a criminal record. That's encouraging. The White House says about three quarters of the people who found work last month had never worked before or had given up on the job market and are now coming back in.

CORNISH: That's NPR's Scott Horsley. Scott, thanks for explaining it.

HORSLEY: You're welcome. Transcript provided by NPR, Copyright NPR.