Unemployment Rate Hits 50-Year Low
U.S. employers added 136,000 jobs in September-below expectations, but enough to send the unemployment rate to its lowest level in 50 years.
The Bureau of Labor Statistics said total nonfarm payroll employment rose by 136,000 in September. It also revised July’s figures upward by 7,000 from +159,000 to +166,000; and August’s upward by 38,000 from +130,000 to +168,000, for a net gain of 45,000 jobs.
BLS said after revisions, job gains have averaged 157,000 per month over the past three months. Job growth has averaged 161,000 per month thus far in 2019, compared to an average monthly gain of 223,000 in 2018.
The report said the unemployment rate fell to 3.5 percent in September, the lowest level since December 1969. Over the month, the number of unemployed persons decreased by 275,000, to 5.8 million. The labor force participation rate held at 63.2 percent in September.
“Job growth was steady in September, but the drop in the unemployment rate and the upward revision of August’s data suggest that the labor market remains strong,” said Mike Fratantoni, chief economist with the Mortgage Bankers Association. “This is in contrast to other data we have seen in the past week which suggest a sharp slowdown in U.S. growth. On net, this news should keep rates from falling further, as it casts doubt that the Fed will cut their rate target later this month. We still expect the Fed will drop rates one more time this year.”
Sarah House, senior economist with Wells Fargo Securities, Charlotte, N.C., said the drop in the jobless rate to a 50-year low suggests the labor market is solid. “Signs that the economy is losing momentum beyond the factory sector are mounting, but the labor market is not falling off the rails,” she said. “Nevertheless, September’s job figures add further evidence that the trend in hiring continues to slow. We expect private sector job growth to remain on a downward trend in the coming months.”
The report said average hourly earnings for all employees on private nonfarm payrolls in September fell by one cent to $28.09, after rising by 11 cents in August. Over the past 12 months, average hourly earnings have increased by 2.9 percent. Average hourly earnings of private-sector production and nonsupervisory employees rose by 4 cents to $23.65.
BLS said the average workweek for all employees on private nonfarm payrolls was unchanged at 34.4 hours in September. In manufacturing, the average workweek and overtime remained at 40.5 hours and 3.2 hours, respectively. The average workweek of private-sector production and nonsupervisory employees held at 33.6 hours.
“Through the noise, it looks like wage growth remains stuck in its recent range,” House said. “With demand for labor softening and many companies contending with higher input costs as the trade war lingers and broadens, we do not expect to see any meaningful strengthening in wage growth in the coming months.”
Odeta Kushi, Deputy Chief Economist with First American Financial Corp., Santa Ana, Calif., said the prime-age labor force participation must continue to rise for wage growth to continue its upward trend. “While the prime-age labor force participation rate remains below the 2007 level and the long-run trend, if we see continued growth to 83 percent, it could push wage growth for all production and nonsupervisory employees on private nonfarm payrolls to as high as 3.8 percent,” she said.
“The report does little to clarify the divergent views on the Federal Reserve about whether the economy is slowing or not, but we continue to believe the Fed will cut rates this quarter due to trade uncertainties and weak manufacturing data,” said Doug Dunan, chief economist with Fannie Mae, Washington, D.C.
