U.S. employment grew by 156,000 jobs in September and the unemployment rate ticked up to 5 percent, the Bureau of Labor Statistics reported Friday.
While September’s job growth fell slightly short of economists’ expectations for roughly 168,000 new jobs, the details of Friday’s reported indicated cause for optimism about the economy.
The report suggested that the jobs outlook is continuing to improve. Even with downward revisions of 7,000 to the past two months’ job gains, payroll growth has averaged 192,000 over the past three months, about twice as much as is needed to keep the unemployment rate moving down over time.
Furthermore, the one-tenth percentage point increase in the unemployment rate came for the “right” reason, namely that more people began searching for jobs, and not because workers lost jobs.
Friday’s report was highly anticipated in part because it is the second-to-last such release before the November elections, and the one most likely to sway opinions about the economy and President Obama’s record before voters head to the polls. The jobs numbers have also received special attention because they have held up even while other signs of U.S. growth have faltered, providing reassurance that a recession is not imminent.
Even as gross domestic product growth disappointed in the first half, monthly payroll gains have remained resilient and claims for unemployment benefits have plumbed the lowest levels in four decades.
Most forecasters believe that growth will perk up and come into alignment with the stronger signals from the labor market. Prior to Friday’s jobs report, the Federal Reserve Bank of Atlanta projected the inflation-adjusted output growth rate to rise 0.8 percent points to 2.2 percent in the third quarter.
Meanwhile, Federal Reserve officials have delayed tightening monetary policy and kept a near-zero interest rate target, a stance that Federal Reserve Janet Yellen has described as an effort to give the U.S. “room to run” in bringing workers lost during the recession back into the job search and into positions. That desire appears to be fulfilled in September, as the labor force swelled by 444,000 people, according to the household survey.
At stake are potentially hundreds of thousands or millions of people who would like jobs if they were available but have fallen out of the Bureau’s definition of the labor force because they are not actively looking for jobs.
In recent months, some of that group have begun finding jobs and more have resumed looking for positions, halting a long-running decline in the labor force participation rate. After plummeting from 66 percent of the population prior to the financial crisis to as low as 62.4 percent last fall, the lowest such level since the late 1970s when women were still entering the workforce, the labor force participation rate has leveled off in 2016. Much of that decline is attributable to America’s aging population, and is expected to continue in the years ahead. But some of it also reflects the fallout from the crisis and the weak economy. It’s that part that the Fed hopes to reverse. In September, the rate ticked up to 62.9 percent.
Speaking on CNBC Friday morning, Federal Reserve Bank of Cleveland president Loretta Mester called Friday’s release “a solid labor market report.”
Other details from Friday’s report were encouraging.
Hourly earnings for workers in the private sector rose 2.6 percent on the year, a rate that suggests ongoing acceleration in wages. That wage growth is also well above recent inflation, meaning that workers’ purchasing power has risen over the past year.
After shedding 222,000 jobs in the months since September 2014 as oil prices collapsed, the mining sector as a whole didn’t lose any jobs in September. The decimation of oil production employment has been one of the clearest signs of the global pressures that have crimped U.S. growth even as domestic consumption has remained robust, and Friday’s report hints that those headwinds are lessening.
