US hiring slower in September as global economy weakened
U.S. hiring slowed sharply in September, and job gains for July and August were lower than previously thought, a sour note for a labor market that had been steadily improving.
The U.S. Labor Department said Friday that employers added just 142,000 jobs in September, depressed by job cuts by manufacturers and oil drillers. The unemployment rate remained 5.1 percent, but only because more Americans stopped looking for work and were no longer counted as unemployed.
All told, the proportion of Americans who either have a job or are looking for one fell to a 38-year low.
Some of that decline likely reflects baby boomer retirements, but it also indicates that many Americans remain discouraged about their job prospects. Modest growth and steady, if unspectacular, hiring hasn’t encouraged more people to look for work.
Average hourly wages also slipped by 1 U.S. cent and have now risen by only 2.2 percent in the past year.
U.S. consumers are spending at a healthy pace, boosting job gains in sectors like retail and hotels and restaurants. But lackluster growth overseas has sharply reduced exports of factory goods.
China, the world’s second-largest economy, is slowing. Europe is still weak. Emerging economies such as Brazil and Turkey are struggling to grow at all. Sharply lower oil prices have also prompted drilling firms to lay off workers and slash spending on steel pipe and other equipment.
The tepid pace of hiring complicates the picture for the Federal Reserve, which is deciding whether to raise short-term interest rates later this year for the first time in nine years.
U. S. Federal Reserve
Chair Janet Yellen has said that the job market is nearly healed. But she has added that she wants to see further hiring and wage gains to increase her confidence that inflation will move closer to the Fed’s target of 2 percent.
“Every aspect of the September jobs report was disappointing,” said Michelle Girard, an economist at RBS Securities. It “strengthens the case that the Fed will be forced to stay on hold over the remainder of the year.”
US Stocks Tumble on
Weak Jobs Report
Stock index futures and bond yields fell after the payroll figures came in far weaker than economists were expecting.
Job gains have averaged 198,000 a month this year, a solid total, but below last year’s average of 260,000.
Construction firms added 8,000 jobs and professional services, which includes accounting and architects, gained 31,000. Government added 24,000 jobs. But financial services reported no gain, and hiring in education and health fell to the lowest level in nearly a year.
Some recent data has pointed to a healthy economy: Sales of new U.S. homes have jumped to a seven-year high, and auto sales soared nearly 16 percent in September to the highest level in a decade.
At the same time, the dollar has risen about 15 percent against overseas currencies in the past year, making U.S. goods more expensive overseas and imports less expensive. A sharp fall in exports has likely slowed growth in the July-September quarter to an annual rate of just 1.5 percent, according to economists from JPMorgan Chase. That’s down from a 3.9 percent pace in the April-June quarter.
Wall Street stocks opened sharp- ly lower Friday after the September employment report showed the U.S. economy added just 142,000 jobs last month.
Five minutes into trade, the Dow Jones Industrial Average was at 16,031.73, down 240.28 points (1.48 percent).
The broad-based S&P 500 fell 28.57 (1.49 percent) to 1,895.25, while the tech-rich Nasdaq Composite Index dropped 69.32 (1.50 percent) to 4,557.77.
The jobs report fell far short of estimates that the U.S. economy added 205,000 jobs in September. The Labor Department also trimmed its estimates for jobs growth in July and August.
Analysts lowered the odds the Federal Reserve will imminently raise interest rates.
“This data helps the case for the Fed to stay on hold in October,” said Jim O’Sullivan, chief U.S. economist at High Frequency Economics.