By Denny Gulino
WASHINGTON (MaceNews) – The September jobs report Friday, with 136,000 payroll slots added, was modestly positive for hiring and the 50-year-low unemployment rate of 3.5% was everything a labor market economist could hope for, yet there was a shadow cast overall, a slowing of wage growth that suggested prosperity is ebbing.
Manufacturing employment was a negative number even without accounting for the GM strike, which fell outside the measurement window.
The sharp increase in employment, a gain of 391,000, should comfort the Federal Reserve as it ponders rate policy at the end of the month. That easily absorbed a 117,000 expansion of the labor force.
Yet the downtick in average monthly payrolls to 161,000 this year so far – versus 223,000 last year – jibes with all the indicators of a growth trajectory leveling toward 2% or possibly below in the year ahead that might keep payrolls tapering.
Taken by itself, the two-tenths improvement in the unemployment rate to 3.5% seemed so spectacular that analysts were left wondering if there has been an underlying change in its significance. The lowest rate since the end of 1969 no longer seemed to say the labor market was at its tightest in half a century, when the broader unemployment rate, dubbed “U-6,” was still at 6.9% and wage growth back under an annual 3%.
That average hourly earnings could slip back to 2.9% over the year through September from 3.2% through August and as high as 3.4% in February seemed to contradict forecasts going back years of what was expected to happen should the unemployment rate fall anywhere near to where it is now. It suggested that a significant portion of new hiring is composed of lower-wage jobs. Yet with an annual consumer inflation rate under 2%, the year has seen some small improvement in overall purchasing power.
Another clue to the weakish wage picture was in the latest report. “The number of persons employed part time for economic reasons (sometimes referred to as involuntary part-time workers) was essentially unchanged at 4.4 million in September,” the Bureau of Labor Statistics said.
The measure of labor slack represented by those who were not counted as unemployed because they had not looked for a job in a year yet were available to work, remained at 1.3 million in September.
Health care generated 39,000 new jobs in the month, the professional and business services category – key to an expanding economy – was up 34,000. Government hiring was up 22,000 even with only a “negligible” 1,000 added for the Census.
Transit and other ground transportation jobs rose by 11,000. And although measures of consumer spending remain healthy, the jobs report showed the jobs of those who are in the stores keeps falling. The retail category lost another 11,000 positions in September, part of the 197,000 jobs lost since the beginning of 2017.
Manufacturing lost 2,000 jobs while construction added 7,000. Oil patch hiring did not change and there was little change in several other categories, like leisure, financial, wholesale trade and information.
Upward revisions of the previous two months reinforced the notion that while hiring overall is at a diminished pace it is nevertheless a sturdy pattern. August went from a so-so 130,000 payrolls expansion to an above average 168,000. July was improved by 7,000 to be also above average at 166,000.
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Reach this reporter at: denny@macenews.com