There was a lot of important information on the U.S. economy released this week, but the biggest data point is without a doubt the latest monthly job report from the Bureau of Labor Statistics (BLS) out this morning. Indeed, total nonfarm employment in America rose by 134K payrolls in September, well below the 180K increase economists expected and the smallest monthly gain in a year. The latter statistic is key because twelve months ago hurricanes Harvey and Irma disrupted job growth in America, and it appears that hurricane Florence had a similar impact this September. Indeed, the Labor Department reported that 299K Americans missed work last month due to bad weather, up from 23K in August. Further, there was a net upward revision of 87K hires to the prior two reports, which helped payroll growth in the United States average +190K during the past three months.
That is higher than the 2017 average (+181K) and comfortably above Federal Reserve officials’ estimates for what is needed to keep up with U.S. population gains. Moreover, this was the 96th consecutive month of job growth in America, one of the longest streaks in U.S. history. As for joblessness, the official unemployment rate (U-3) fell to 3.7 percent in September, a near-half-century low, but the underemployment rate (U-6) edged higher to 7.5 percent. With respect to wage growth, average hourly earnings rose by 0.3 percent last month and 2.8 percent over the past year, both in line with estimates. Overall this was a very “noisy” data release due to the weather, and sharp revisions could be seen over the next two months. More importantly, the bigger theme of a tight labor market remains intact, and joblessness at cycle lows and relatively sluggish nominal wage growth together suggest that we have yet to reach full employment, and that the economy therefore still has room to keep growing.
Sources: Econoday, U.S. DoL, Twitter, Bloomberg, FRBSL
Post author: Charles Couch