September nonfarm payrolls grow by 134,000; jobless rate drops to 3.7 percent
Friday, October 05, 2018
Nonfarm payroll jobs increased by 134,000 in September vs. 201,100 in August, as the unemployment rate dropped to 3.7 percent from August’s 3.9 percent, the Bureau of Labor Statistics reported. In September, the number of unemployed workers declined to 6 million compared with 6.2 million in August.
For major groups of workers, the rates of unemployment were a mixed bag. The rate of joblessness for adult women fell to 3.3 percent in September vs. 3.6 percent in August.
White jobless rates in September were 3.3 percent compared with 3.4 percent in August. September’s rates of unemployment for adult men (3.4 percent), teens (12.8 percent), blacks (6 percent), Asians (3.5 percent) and Hispanics (4.5 percent) changed little or none from August’s numbers.
A decreasing unemployment rate could spur increases in workers’ hourly wage-income. Employers could hike employees’ pay when the flow of job seekers slows. September’s BLS data does show growth in wage income, but with room for improvement, according to economist Elise Gould of the Economic Policy Institute in Washington, D.C., on Twitter.
"In September, average hourly earnings for all employees on private nonfarm payrolls rose by 8 cents to $27.24," the BLS reported. "Over the year, average hourly earnings have increased by 73 cents or 2.8 percent" vs. 2.9 percent in August.
In September, the employment-population ratio was 60.4 percent (the share of the labor force now on payrolls vs. the total working-age population) compared with 60.3 percent in August.
Small business hiring rose in September. Firms of 1-49 employees hired 56,000 workers in September compared with 21,000 workers in August, according to the ADP National Employment Report. Companies of 50-499 workers hired 99,000 employees vs. 121,000 employees in August. Firms with 500 or more employees hired 75,000 workers in September compared with 31,000 workers in August. National franchise employment declined 5,700 in September.
ADP’s National Employment Report aggregates America’s nonfarm private sector employment from actual transactional payroll data, according to the ADP Research Institute that collaborates with Moody’s Analytics. ADP’s reporting is thus distinct from the BLS methodology of business and household surveys.
According to ADP’s report, the service sector of the economy expanded by 184,000 jobs in September vs. 139,000 in August. Professional/business services led the way with 70,000 jobs in September. Education/health was next with 44,000 new hires followed by trade, transportation and utilities with 30,000.
In the goods-producing sector, hiring grew by 46,000 jobs in September versus 24,000 in August. Manufacturing firms hired 19,000 employees in August compared with 23,000 in July. Construction employment rose by 5,000 in August from 7,000 new hires in July.
"The labor market continues to impress," said Ahu Yildirmaz, vice president and co-head of the ADP Research Institute. "Both the goods and services sectors soared. The professional and business services industry and construction served as key engines of growth."
Mark Zandi, chief economist of Moody’s Analytics, concurs. "The job market continues to power forward," Zandi said. "Employment gains are broad-based across industries and company sizes."
On the half-empty side, global trade relations remain fraught. The outcome of the United States-Mexico-Canada pact that appears to revise the North American Free Trade Agreement hinges in big part on congressional approval, with the November midterm elections looming large. The trade conflict between China and the U.S. is increasing, with an escalation of tit-for-tat tariffs.
Under the helm of Federal Reserve Bank Chairman Jerome Powell, a course of gradual interest rate hikes, three so far in 2018, are proceeding. Rising interest rates hike the price to borrow. That trend after the Fed’s lower interest-rate policy after the Great Recession slows credit-based activity for U.S. businesses and consumers.
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