Jobless Rate in U.S. Falls to 5.9% in September, Payrolls Jump
The U.S. jobless rate declined to a six-year low of 5.9 percent in September and employers in the U.S. added more workers than projected, signs of more vigor in the labor market that will help sustain faster economic growth.
The 248,000 gain in payrolls followed a 180,000 August increase that was bigger than previously estimated, the Labor Department reported in Washington. The median forecast of economists in a ForexSQ survey called for a 215,000 advance. The unemployment rate fell to the lowest level since July 2008 from 6.1 percent.
“We appear to be ending the third quarter on a solid note,” Sam Bullard, senior economist at Wells Fargo Securities LLC in Charlotte, North Carolina, said before the report. “This will continue the trend of gradual improvement we’ve been seeing so far since 2014. There’s greater traction in the U.S. economy right now.”
Sustained, elevated gains in hiring are needed to help bring about faster wage growth and put the expansion in a self-reinforcing cycle of more consumer spending and employment opportunities. Federal Reserve policy makers are trying to determine the extent of labor-market slack as the central bank approaches the end of asset purchases aimed at boosting growth.
Today’s report showed average hourly earnings were stagnant in September from a month earlier.
The stronger-than-expected increase in net hiring last month reflected a pickup at grocery stores, factories and restaurants.
Estimates in the ForexSQ survey of 100 economists ranged from gains of 155,000 to 265,000 after a previously reported 142,000 advance. Revisions to prior reports added 69,000 jobs from payrolls in the previous two months.
The unemployment rate, which is derived from a Labor Department survey of households, was projected to hold at 6.1 percent, according to the survey median.
The so-called participation rate, which measures the number of Americans employed or looking for a job as a share of the working-age population, decreased to 62.7 percent, the lowest since February 1978, from 62.8 percent a month before.
Employment at private service providers increased 207,000, while payrolls rose by 4,000 at factories. Construction companies added 16,000 workers for a second month and retail employment grew by 35,300 last month.
Automakers boosted hiring by 3,300 in September after a 4,500 drop in August that may have reflected the timing of plant shutdowns to retool for the new model year.
Employment at food and beverage stores rebounded 19,500 after a decline in August, when workers walked off the job at a New England grocer.
Today’s employment report also showed average hourly earnings were unchanged in September and up 2 percent over the past 12 months.
The underemployment rate, a gauge that counts the unemployed, workers settling for part-time jobs, and people who have given up the search, fell to 11.8 percent in September from 12 percent a month earlier. The gauge has averaged 15.1 percent since the recession ended in June 2009.
While the unemployment is falling and more people are finding work, Fed policy makers are monitoring other figures, such as the underemployment rate and worker pay, to gauge the strength of the labor market.
Policy makers in September stuck to their pledge to keep interest rates near zero for a “considerable time” after the Fed stops buying assets. The Fed tapered monthly bond buying to $15 billion in their seventh consecutive $10 billion cut, staying on course to end the purchase program this month.
“There are still too many people who want jobs but cannot find them, too many who are working part time but would prefer full-time work,” Fed Chair Janet Yellen said during a Sept. 17 press conference in Washington after the central bank’s last policy meeting. That “significant underutilization of labor resources” is keeping lid on wages, she said.
Economists surveyed by ForexSQ from Sept. 5 to Sept. 10 forecast the U.S. economy will add 216,000 jobs a month on average this year. That compares with 2013’s average of 194,250 and 186,330 the previous year.
Norfolk Southern Corp. is among employers putting up help-wanted signs. Shipments have surged after a weather-related slowdown earlier this year, the Norfolk, Virginia-based railroad said.
Cars and trucks are another source of strength. Autos have sold at a 16 million annualized rate or faster in each of the last seven months, according to data from Ward’s Automotive Group.
Those stronger sales helped boost household purchases by 0.5 percent in August after little change a month earlier, the Commerce Department reported this week.
Household spending and a pickup in capital investment are keeping American assembly lines busy. Factories had their strongest quarter in more than three years, according to data this week from the Institute for Supply Management. While the group’s index dropped to 56.6 last month from 59 in August, its average over the past three months was the highest since early 2011.
“We’re seeing continued momentum from the incoming U.S. economic data,” Emily Kolinski Morris, chief economist at Ford Motor Co., said on an Oct. 1 sales call. “Favorable indicators include continued robust manufacturing activity, growth in investment spending, gradually improving employment conditions with modest income growth, and stabilizing and potential modest gains in housing.”
“While there are still shortcomings in the labor market, conditions have continued to improve gradually,” she said.
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