US posts solid jobs data in September, unemployment up
Lucia Mutikani |
US employment growth accelerated in September, but the labour market remained sluggish and failed to keep pace with new job-seekers as employers dealt with fallout from import tariffs and integrated artificial intelligence into some positions.
The jobless rate rose to 4.4 per cent, its highest level in four years, from 4.3 per cent in August, the Labor Department said in its closely watched employment report on Thursday.
The August payrolls data was revised to show employers shedding jobs for the second time this year, underscoring the labour market softness.
Other data from the Labor Department showed layoffs stayed low in mid-November, suggesting the job market remained stuck in what economists and policymakers call a “no-hire, no-fire” state.
Some economists viewed the rise in the jobless rate as bolstering the argument for another Federal Reserve interest rate cut next month, while others said the better-than-expected job growth suggested the US central bank should stay pat, especially since policymakers would not get another employment report before the December 9-10 meeting.
“The upside surprise in this report is positive, but it likely dampens prospects for a rate cut in December,” said Olu Sonola, head of US economic research at Fitch Ratings.
“The slight uptick in the unemployment rate complicates the narrative – pick your poison, stronger job growth or rising unemployment, because the good news may not be as good after all.”
Non-farm payrolls increased by 119,000 jobs after a downwardly revised drop of 4000 in August, the Labor Department’s Bureau of Labor Statistics said.
Economists polled by Reuters had forecast 50,000 jobs would be added after a previously reported gain of 22,000 in August. The survey of establishments also showed job growth in July was downgraded by 7,000 to 72,000 positions.
The report was initially due on October 3, but was delayed by the shutdown of the federal government. The 43-day shutdown, the longest in US history, forced the BLS to cancel the release of October’s report as no data was collected for the household survey to calculate the unemployment rate for that month.
Job gains in September were partially flattered by difficulties adjusting for workers leaving their summer jobs, resulting in higher payroll counts in the leisure and hospitality industry as well as retail industry.
The healthcare sector continued to lead employment growth, adding 43,000 jobs in September, mostly in ambulatory services and at hospitals. Employment at restaurants and bars increased by 37,000 jobs, with overall leisure and hospitality payrolls rising by 47,000.
Retailers added 13,900 positions. But the transportation and warehousing industry lost more than 25,000 jobs, while manufacturing shed a further 6,000 positions. Professional and business services payrolls decreased, with temporary help services accounting for the bulk of the drop.
Federal government employment dropped by another 3000 jobs, bringing the total losses since January to 97,000. That number is expected to surge as tens of thousands of workers who took buyouts dropped off government payrolls at the end of September.
The labour market has lost significant momentum this year, as evidenced by sharp downward revisions to non-farm payroll counts. Economists and policymakers blame the slowdown on reduced supply and demand for workers.
Economists estimate the economy needs to create less than 100,000 jobs per month to keep up with growth in the working-age population, though the rise in the unemployment rate in August and September suggests the break-even rate could be higher.
“The unemployment rate has trended higher, but for the ‘right’ reasons because labour force participation is rising even faster than the solid gains in employment,” said Stephen Stanley, chief US economist at Santander US Capital Markets.
“This is very far from the results one would expect if the labour market were spiralling downward.”
Reuters
