Nonfarm Payrolls Rose 136,000 in September
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Implications:  The US labor market remains strong.  Nonfarm payrolls rose 136,000 in September, which was slightly less than the consensus expected 145,000.  However, at least a few reasons suggest faster job growth in the final quarter of the year.  First, upward revisions to prior months added 45,000.  Remember the tepid 130,000 gain in payrolls in August?  That's now been revised to a healthier 168,000.  Second, the initial report on September has come in below consensus expectations in ten of the past twelve years, and usually gets revised higher.   And third, civilian employment, an alternative measure of job creation that includes small-business start-ups rose 391,000 in September.  Civilian employment is up 183,000 per month in the past year while payrolls are up 179,000, both healthy figures.  The best news today was the drop in the unemployment rate to 3.5%, the lowest level since the New York Jets and Joe Namath were reigning Super Bowl champs (that's 1969 if you're a Millennial, or younger).  Meanwhile, the employment to-population ratio (the share of those age 16+ with jobs) increased to 61.0%, the highest since 2008.  The labor force participation rate remained at 63.2%, tying the highest level since 2013.  The worst news in today's report was that average hourly earnings were unchanged in September.  We think the months ahead will show that's an outlier and wage growth will rebound quickly.  Even so, average hourly earnings are up a respectable 2.9% in the past year.   The total number of hours worked were up 0.1% in September and are up 1.4% in the past year.  Combining the figures on hours and wages, total wages are up 4.3% from a year ago, which means consumers have plenty of purchasing power.  Yes, it'd be better if payrolls grew faster in September, but, given demographics (particularly aging Baby Boomers), anything north of 100,000 per month will tend to push down the jobless rate over time and it's hard to see the jobless rate going much lower than the current 3.5%.  In terms of monetary policy, today's report shows why the economy doesn't need another rate cut.  Regardless, the Fed is focused on potential downside risks it can't control, like Brexit and trade negotiations, so another rate cut later this year is much more likely than not. 

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Posted on Friday, October 4, 2019 @ 11:39 AM

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