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 out this morning. Indeed, total nonfarm employment in America rose by 136K payrolls in September, slightly worse than expected but still the 108th consecutive month of net job growth, the longest such streak on record. There was also a significant upward revision of 45K payrolls to the August and July reports, which resulted in a less-volatile 3-month average job gain of 157K, comfortably above what is needed to keep up with U.S. population increases. Employment growth has clearly slowed over the past year, but not nearly as much as the alarmist ISM surveys earlier this week would imply.
Instead, the moderation remains in line with the gradual decline in job creation we suggested would occur in a tightening labor market following 2018’s above-trend pace of hiring. Elsewhere in the report, the unemployment rate (U-3) fell to 3.5 percent in September, the lowest reading since 1969, and the underemployment rate (U-6), a measure of workers who want full-time work but can only find part-time employment, declined to a nearly two-decade low (6.9 percent). As for average hourly earnings, the headline print disappointed forecasts but income gains remained very strong for production (non-managerial) workers and in typically low-wage industries. This bodes well for consumer spending, the largest component of U.S. GDP, since consumption behavior for lower-income Americans is more sensitive to changes in earnings. Altogether the U.S. labor market is still doing just fine. Not amazing, not terrible, and definitely not pre-recessionary. Other highlights from the report:
- Q3 was the best quarter for production and non-supervisory wage growth since the last economic cycle
- The prime-age employment-to-population ratio hit a new cycle high of 80.1%
- Job-leavers (quits) as a percentage of total unemployed rose to a near cycle high
- Wage growth in the professional & business services industry climbed to a cycle high
- Hispanic unemployment fell to a record low
Sources: Econoday, U.S. DoL, Twitter, FRBSL