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 fell by 33K payrolls in September, the first monthly decline in seven years. There was also a net downward revision of 38K payrolls to the July and August reports, which altogether resulted in an average rate of job growth of just 91K during the past three months. That is the worst reading since June 2012 and below some Federal Reserve (Fed) officials’ estimates for what is needed to keep up with U.S. population growth.
As for joblessness in America, the official unemployment rate (U-3) declined to 4.2 percent in September, and the underemployment rate (U-6) slid to 8.3 percent, both recovery lows. Further, the labor force participation rate lifted last month to 63.1 percent, the highest reading in over three years. With respect to wage growth, average hourly earnings jumped by 0.5 percent in September. That was much better than expected and enough to raise the annual pace of growth to 2.9 percent, a recovery high. However, there is a possibility that the low-wage production workers temporarily lost because of hurricanes Harvey and Irma arithmetically resulted in a higher earnings print last month. Moreover, the tropical storms make the September data very noisy and therefore subsequent job reports will be more telling about the true health of the U.S. labor market.
Sources: Econoday, U.S. DoL, FRBSLPost author: Charles Couch