Jobs growth may have slowed in September, but the U.S. unemployment rate just hit a 50-year low in September 2019, as non-farm payrolls jumped 136,000.
While that was below forecasts for 145,000, it was enough to push the jobless rate to just 3.5%, matching a level we haven’t seen since 1969. We also saw many signs of strength including robust hiring in health care, transportation, and professional services.
Even the July and August reports were revised higher by a combined 45,000 jobs.
· Education and health services added 40,000 jobs
· Professional and business services added 34,000
· Government jobs were up by 22,000
· Leisure and hospitality jobs increased by 21,000
· Transportation and warehousing jobs were up to 15,700
· Information jobs were up by 9,000
· Construction jobs were up by 7,000
Unfortunately, manufacturing did see a decline of 2,000, as retail shed 11,400.
Still, the news also keeps fears of recession at bay.
“The unemployment rate usually rises ahead of a recession, so a fresh decline pushes out the timeline for any potential recession into late 2020 at the earliest,” said Josh Wright, chief economist at iCIMS, as quoted by Reuters.
However, there were also signs of weakness.
Unfortunately, the pace of hiring has slowed since 2018 when the U.S. economy added an average of 223,000 jobs a month. It also comes on top of news that activity in U.S. factories has fallen for the last two months, and on news the services sector grew at its weakest pace.
And, after peaking at 3.5% in February 2019, wage growth has been trending down ever since. That’s far below the pace where it should be, considering unemployment is at a 50-year low.
“The labor market is still strong, adding more than enough jobs each month to absorb new entrants to the labor force. But even with a strong labor market, wage growth remains muted, limiting the risk that labor market tightness will push inflation meaningfully higher,” said Eric Winograd, senior U.S. economist at AllianceBernstein, as quoted by CNBC.
“The question that matters most for the economy is how long the labor market can stay strong given the ongoing slowdown in growth,” he added.
Overall, the report does provide further evident the labor market is still healthy, and doesn’t necessarily increase the likelihood of further cuts from the Federal Reserve.