U.S. unemployment falls to 50-year low, job growth cools further

by Wesley Brown (wesbrocomm@gmail.com) 173 views 

The U.S. unemployment rate fell to a 50-year low Friday (Oct. 4), but weaker-than-expected job growth underpinning the nation’s tight labor pool continues to stoke fears of a possible economic slowdown heading into the fourth quarter.

In September, the U.S. unemployment fell 0.2 percentage points to 3.5%, the lowest level since 1969, according to labor data from the U.S Bureau of Labor Statistics (BLS). However, nonfarm payroll employment climbed by only 136,000 between months, slightly below the 145,000 payroll positions forecasted by Wall Street economists.

That pushes U.S. job growth through the third quarter of 2019 to a monthly average of 161,000, well below the average monthly gain of 223,000 in 2018, BLS data shows. Despite the disappointing jobs data, Trump administration officials touted the nation’s 19th straight month below 4% and series low unemployment levels spread across several categories.

“Low unemployment rates were widespread across Americans of many backgrounds. The unemployment rate for Americans with less than a high school diploma dropped to a record low since reporting began in 1992,” said Eugene Scalia, the U.S. Labor Department Secretary.

“The African-American unemployment rate held at a record low from August and the unemployment rate for Hispanic-Americans set a new record low,” Scalia continued. “Adult women matched their lowest unemployment rate during the Trump Administration at 3.1%, which is the lowest since 1953.”

However, several top economists noted the year-over-year decline in job growth. The highly watched ADP National Employment Report that was released on Wednesday ahead of the U.S. jobs report also showed that private sector employment only increased by 135,000 jobs between August and September.

“The job market has shown signs of a slowdown,” Ahu Yildirmaz, vice president and co-head of the ADP Research Institute, said of the monthly report derived from ADP’s actual payroll data that measures the change in total nonfarm private employment each month on a seasonally-adjusted basis. “The average monthly job growth for the past three months is 145,000, down from 214,000 for the same time period last year.”

Mark Zandi, chief economist of Moody’s Analytics, added, “Businesses have turned more cautious in their hiring. Small businesses have become especially hesitant. If businesses pull back any further, unemployment will begin to rise.”

Michael Madowitz, economist with the left-leaning Center for American Progress in Washington, D.C., was even more critical, citing the fact that wage growth has also decelerated by 2.9% over the year.

“The broader economic slowdown has now reached the labor market. Wage growth has slowed, and hiring has now fallen off significantly over the past year, especially in the private sector. This month’s jobs numbers follow months of other negative economic indicators,” said Madowitz. “We’re seeing exactly what we’d expect to see in most of the economy—manufacturing is taking the biggest hit from Trump’s self-inflicted trade war, and the administration doesn’t seem to have any policies to lessen the impact.”

The further hiring slowdown in September comes on top of a revised 159,000 and 168,000 new jobs in July and August, respectively. The change in total nonfarm payroll employment for July was revised up by 7,000 and by a robust 38,000 in August. With these changes, employment gains in July and August combined were 45,000 more than previously reported.

Among the major worker groups, the unemployment rate for Whites declined to 3.2% in September. As noted by Scalia, the jobless rates for adult men (3.2%), adult women (3.1%), teenagers (12.5%), Blacks (5.5%), Asians (2.5%), and Hispanics (3.9%) showed little or no change over the month.

By sector, payroll employment in health care and professional business services jobs trended upward in September with the addition of 39,000 and 34,000 positions, respectively. Employment in the federal government, which last month brought the hiring of 25,000 temporary workers to prepare for the 2020 Census, added another 22,000 for the month.

Employment in transportation and warehousing edged up in September by 16,000 with notable growth in transit workers, couriers and messengers. In the loss column, retail trade employment continued to decline with the loss of 11,000 positions, largely due to layoffs at traditional brick-and-mortar establishments.

The manufacturing sector continued its prolonged downturn, losing 2,000 jobs in September. That sector has lost more than 78,000 jobs in the past year. Employment in other major industries, including mining, construction, wholesale trade, information, financial activities, and leisure and hospitality, showed little change over the month.

In September, average hourly earnings for all employees on private nonfarm payrolls fell by a penny to $28.09 after rising 11 cents in the previous month. Over the year, average hourly earnings have increased by 2.9%. The average workweek for all employees on private nonfarm payrolls remained at 34.4 hours in September. In manufacturing, the work week and overtime were 40.6 hours and 3.2 hours, respectively.

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