Northwest Arkansas Democrat-Gazette
September hires fall to 142,000
Jobless rate holds steady at 5.1% as labor force shrinks
WASHINGTON — U.S. employers cut back sharply on hiring in September and added fewer jobs in July and August than previously thought — a sour note for a labor market that had been steadily improving.
The economy added 142,000 jobs last month, the Labor Department said Friday. Job cuts by manufacturers and oil drillers dragged on the number. The unemployment rate remained 5.1 percent, but only because many Americans have stopped looking for work and are no longer counted as unemployed.
Friday’s tepid jobs report from the government suggested that the U.S. economy, which has been outshining others around the world, is weakening.
“It’s a return to risk aversion; companies are retreating back into their shells a bit,” said Nariman Behravesh, the Lexington, Mass.-based chief economist for IHS Inc. “It’s starting to concern me a little bit. I’m not throwing in the towel, but it’s something that gives us pause.”
Lackluster growth overseas has reduced exports of U.S. factory goods. China, the world’s second-largest economy, is slowing. Europe is struggling. Emerging economies from Brazil to Turkey are straining to grow at all.
“The weakness in the global economy is washing onto American shores,” James Marple, senior economist at TD Bank, said in a note to clients.
The dollar has risen about 15 percent against overseas currencies in the past year,
making U.S. goods costlier overseas and imports cheaper. Lower exports likely helped hold growth in the July-September quarter to a meager 1.5 percent annual rate, according to Michael Feroli, an economist at JPMorgan Chase. In addition, sharply lower oil prices have led U.S. drilling firms to lay off workers and cut spending on equipment.
The tepid pace of hiring complicates the picture for the Federal Reserve, which is considering whether to raise interest rates from record lows. Fed Chairman Janet Yellen has said that the job market is nearly healed. But she has also said she wants to see further hiring and pay growth for reassurance that inflation is moving toward the Fed’s 2 percent target.
“We are not likely to fall into recession, but with maybe a third of the nation’s economy contracting, does the Fed really want to raise interest rates and make it worse?” said Mark Vitner, a senior economist at Wells Fargo Securities in Charlotte, N.C. He cited mining, manufacturing, agriculture and energy as industries that are in decline.
The wage picture was also dim. Average hourly earnings for all employees fell by a cent in September from the prior month to $25.09, the report showed. They increased 2.2 percent over the past 12 months, the same year-overyear change as in August. They’ve posted a 2 percent gain on average since the current expansion began in mid2009.
“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.”
The shrinking of the U.S. labor force — the number of people either working or looking for work — reflects in part the first wave of retirements of the vast baby boom generation. But it also signals 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.
Though the overall job market has lost some vigor, U.S. consumers are spending at a healthy pace and helping job growth in sectors such as retail and hotels and restaurants. But lackluster growth overseas has sharply reduced exports of factory goods.
So far this year, job gains have averaged 198,000 a month, a solid total but below last year’s average of 260,000.
Last month, construction companies added 8,000 jobs and professional services, which includes accounting and architects, gained 31,000. Government added 24,000. But financial services reported no gain. And hiring in education and health fell to its lowest level in nearly a year.