The Bureau of Labor Statistics released employment data for the month of September, and the jobs report came in below expectations. Here’s a rundown of everything you need to know.
What You Need To Know
The nonfarm payroll number came in at +136,000, below consensus economist expectations of +145,000.
The unemployment rate dropped from 3.7% to just 3.5%, its lowest level in 50 years.
The so-called “real” unemployment rate, which factors in those out of the workforce and those who are underemployed, fell 0.3% to 6.9%.
Manufacturing payrolls were mostly flat, while health care added 39,000 jobs, more than any other industry. The retail sector lost another 11,000 jobs in September and has now lost 197,000 total jobs since January 2017.
Wages were a soft spot, falling less than 0.1% month-over-month in September. Wages are up 2.9% in the past year, the lowest growth rate since July 2018.
One of the silver linings of the report was upward revisions of jobs numbers in the past two months. July and August jobs estimates were revised upward from 159,000 and 130,000 to 166,000 and 168,000, respectively.
Markets React
Investors seemed to shrug off the disappointing jobs report on Friday, with the S&P 500 opening higher after dropping 2.2% in the past week. Investors will now watch to see if the mixed jobs report will be enough to push the Federal Reserve to issue a third interest rate cut this month. The bond market is currently pricing in am 81.8% chance of another rate cut this month, according to CME Group.
Expert Take
Joseph Brusuelas, Chief Economist at RSM US LLP, said the September jobs report is yet another indication that the U.S. economy is slowing.
“Given the recent readings of the manufacturing sector, which is in recession, and a service sector that has slowed noticeably forward-looking investors, firm managers and policymakers should anticipate a march down towards 100,000 per month by the end of the year, which is what is necessary to stabilize the unemployment rate. Weak private sector hiring is likely connected to the decline in outlays on capital expenditures caused by policy uncertainty,” Brusuelas said.
Brusuelas said the softening economy will likely trigger another Fed rate cut in October and a fourth in December.
“In our estimation wage growth peaked in late 2018 and the stagnation in hours worked is directly attributable to uncertainty in the direction of trade policy.”
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