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U.S. Adds 156,000 Jobs as Unemployment Climbs to 5%
(about 2 hours later)
At 8:30 a.m. Eastern time, the Labor Department will report the latest figures on hiring and unemployment in September.
As an election season marked by fears about jobs and wages enters the final stretch, the American economy looks more resilient than some campaign rhetoric might suggest.
Employers have added an average of more than 180,000 jobs a month this year, but the labor market’s gains have shown signs of tapering slightly. Wall Street is looking for an increase of about 172,000 in payrolls.
Employers added 156,000 jobs last month, the Labor Department said Friday, enough to accommodate new entrants into the labor force and draw back workers who dropped out after the Great Recession.
Unemployment is expected to remain unchanged at 4.9 percent.
The unemployment rate, which has been stuck at 4.9 percent since the spring, ticked up slightly to 5 percent.
This is what you should watch for:
For all the anxiety at home as well as turmoil abroad, like the “Brexit” vote in Britain, the American job machine continues to hum along.
While Wall Street watches every jobs report, this one will garner less attention because the Federal Reserve is expected to leave rates alone until at least December. The Fed will meet in November, but it is not expected to take action so close to the presidential election. An extra month will also give the policy-makers both the October and November jobs report to chew on before their December meeting.
Before the report, economists on Wall Street had been looking for a gain of 172,000 jobs in September. Although September’s figure was slightly weaker than expected, payroll gains in August were revised upward by 15,000.
But regardless of where the jobs figures come in, the report will be instant fodder on the campaign trail and in Sunday night’s presidential debate. A strong number would help Hillary Clinton’s argument that the economy is fundamentally strong, while a disappointing showing would strengthen Donald Trump’s position that the recovery has failed to deliver meaningful gains to most American workers.
To be sure, tens of millions of workers have barely felt the benefits of the recovery.
Hiring was very robust late last year and reasonably strong for most of this year. The month-to-month wage gains, however, have been very uneven. A big jump in January was followed by almost no increase in February. Similarly, a healthy performance for pay in July seemed to peter out in August.
And despite robust hiring in late 2015 and during much of 2016, notable pockets of economic weakness remain, more than seven years after the start of the current recovery, especially in the oil industry and some industrial sectors.
Over the last 12 months, wages are up 2.4 percent. That is slightly better than the gains of 2.3 percent in 2015, but it is still less that many recession-ravaged workers would like to see at this point in the recovery. Some economists are looking for an uptick in September that would lift the yearly gain to 2.6 percent.
In addition, the proportion of Americans in the labor force remains near 40-year lows, a sign that all those workers who gave up on finding work in recent years are only slowly trickling back to positions at malls, offices, factories and other workplaces.
If they’re right, that would be a sign the tighter labor market is finally paying off and resulting in raises. It may also indicate that minimum wage increases in many states are beginning to filter through the broader economy.
In fact, those prime-age workers who have dropped out — what experts and policy makers at the Federal Reserve blandly term “labor market slack” — should enable the current pace of hiring to continue without much threat of overheating the economy.
After dropping steadily through 2014 and 2015, the unemployment rate has been stuck at just under 5 percent all year. If it remains at 4.9 percent for September — as the consensus says is likely — it will be the first time since early 2012 that the jobless rate has not changed in four months.
“There are still plenty of unemployed people out there, enough for employers to continue to hire at a substantial pace,” said Michael Gapen, chief United States economist at Barclays.
To be sure, slightly more workers returned to the work force in June and July. That is a good sign after the proportion of Americans in the labor force hit 40-year lows in late 2015.
“The expansion will end before you run out of labor,” added Mr. Gapen, who estimates the unemployment rate could drop to 4 percent by the end of 2017.
The best result for September would be an increase in the participation rate and a fall in the unemployment rate, but don’t count on it.
Those two contrasting realities — healthy hiring and falling unemployment on the one hand, millions of economically sidelined Americans on the other — sustain the narrative of the two main presidential candidates, Hillary Clinton and Donald J. Trump.
For all the focus on monthly jobs numbers, statistical quirks abound, some of which can’t be explained by underlying economic conditions.
Whatever their spin, both candidates’ critique of the economy contain kernels of truth. Friday’s report, while generally strong , contained fodder for both.
That means some months tend to look stronger than others, and September is one of them. LPL Financial’s chief economist, John Canally, said that hiring in August had missed the consensus for five years in a row, only to be revised higher the next month.
The initial figure for August this year was a 151,000 increase, which suggests there could be a revision upward reported on Friday. In fact, economists at Goldman Sachs and other firms raised their estimates this week. They cited healthy economic signals, like falling weekly claims for unemployment benefits and encouraging private surveys of business activity.
