Jobs gains fell well short of expectations in September, as the U.S. economy added just 142,000 new payroll jobs and the unemployment rate stayed at 5.1 percent, the Bureau of Labor Statistics reported Friday.
Economists had expected a rebound after August’s disappointing 173,000 mark, but instead Friday’s report showed that job and wage growth in September were weak. Furthermore, revisions to the data for July and August showed that job growth in those months was slower than thought at the time, by 59,000.
Over the past three months, job gains have averaged 167,000, a slowdown from the pace that held throughout the year, and well below the nearly 260,000 monthly average for 2014.
Other details from Friday’s report also suggested that the signs of an accelerating jobs recovery the government had hoped for are missing.
Job growth in the private sector was just 118,000, as goverment employment grew by 24,000, mostly reflecting hiring by state governments.
There were no signs of wage growth in August. Average hourly earnings fell a cent, to $25.09. Over the past year, earnings have grown by just 2.2 percent, no better than in recent months. Economists have looked for accelerating wage growth of labor market tightening, but it has yet to materialize.
Labor force participation fell to 62.4 percent in September, the lowest rate since October of 1977. That drop suggested that the unemployment rate remained steady in the month because of people leaving the labor force, rather than because of people finding jobs.
Over the course of the recession, labor force participation has shrunk both because many workers have struggled to find jobs and have quit searching and because of ongoing demographic changes, including the incipient retirement of the Baby Boom generation. Researchers have debated the relative influence of each factor, with the White House estimating recently that each has been responsible for about half ot the decline.
Friday’s results will likely erase the possibility that the Federal Reserve will tighten monetary policy at its upcoming October meeting, and diminishes the likelihood that a rate increase will come by the end of the year. Bond markets immediately priced in lower possibilities of rate hikes after Friday’s numbers were released.
Nevertheless, there were some reassuring details within the report.
Job losses were mostly confined to mining, and specifically the support services that aid at oil fields. The number of those jobs fell by 7,200 in September, continuing a recent trend in the wake of oil prices falling by roughly half over the past year. The drop in oil prices, along with the appreciation of the dollar that has put pressure on U.S. manufacturers, are among the developments related to slowing growth in China and elsewhere overseas that Fed officials have said are likely to prove “transitory,” rather than a threat to tip the U.S. into recession.
Fewer people are being forced into part-time work. The ranks of people who have only been able to find part-time situations or who have seen their hours cut fell significantly by 447,000 in September. Over the past year, that number is down by 1 million.
More broadly, so-called underemployment continued to drop through the end of the summer. A broad rate of underemployment, the “U6” unemployment rate that includes the unemployed as well as those forced into part-time work or only sporadically looking for work, fell 0.3 percentage points to 10 percent in September, the lowest mark of the recovery.
More broadly, job growth in September was still above the level needed to keep the unemployment rate trending down in the long run. Researchers with the Federal Reserve Bank of Chicago estimate that 100,000 jobs at most are needed each month to keep up with population growth.
At 5.1 percent in September, the unemployment rate is down from 10 percent at the height of the recession. It’s also close to the rate that the Fed views as consistent with an economy at full health.
“We should reach or exceed full employment on a broad set of measures by the end of this year or early next year,” Federal Reserve Bank of San Francisco president John Williams said Thursday.
