Jobless rate at its lowest in almost a half-century

Unemployment fell to a nearly 50-year low in September as U.S. employers added 134,000 jobs. The jobless rate fell to 3.7 percent, from 3.9 percent.

Unemployment fell to a nearly 50year low in September even as employers added a disappointing 134,000 jobs amid increasing worker shortages and possible effects from Hurricane Florence.

The unemployment rate fell from 3.9 percent to 3.7 percent, the lowest since December 1969, the Labor Department said Friday.

Economists had estimated 185,000 new jobs were created last month, according to a Bloomberg survey.

Goldman Sachs expected the hurricane to reduce employment by 33,000 in the Carolinas. But Morgan Stanley said the storm likely affected too limited of an area and struck too late during the week of Labor’s survey to have a meaningful impact. Workers are counted as employed as long as they show up for any part of their pay period.

Yet employment in leisure and hospitality, which includes hotels and restaurants, fell 17,000 last month, suggesting the storm was a factor.

“The headline payroll number is a weather story,” Ian Shepherdson, chief economist of Pantheon Macroeconomics, wrote in a note to clients.

The number of workers across the country who stayed home because of weather increased by 276,000 last month on a not seasonally adjusted basis, compared with a median 7,000 rise over the past 10 September jobs report, said Jim O’Sullivan, chief U.S. economist of High Frequency Economics.

Still another wrinkle is that Labor tends to undercount September employment in its initial estimate and revise it up later, O’Sullivan said.

On the positive side, payroll increases for July and August were revised up by a total 87,000. July’s gain was raised from 147,000 to 165,000 and August’s from 201,000 to 270,000. That largely offsets September’s showing.

Meanwhile, businesses are having a harder time finding qualified job candidates. Many analysts expect the crunch to slow hiring in the months ahead despite strong economic growth.

And a new Trump administration tariff on $200 billion in Chinese imports – along with China’s retaliation against U.S. imports – took effect last month, hitting many consumer goods. That has dinged business confidence and could curtail hiring.

So far, job growth has been surprisingly strong this year despite the hurdles, averaging about 200,000 a month, up from 182,000 in 2017.

❚ Market reaction: There were enough positives in the jobs report, such as the continued decline in the unemployment rate and upward revisions of jobs created in July and August, to push long-term bond yields up again to fresh seven-year highs and pressure stocks. The 10-year Treasury closed at 3.24 percent, its highest level since May 2011.

“The sharp rise in bond yields has investors concerned,” said Thorne Perkin, president of Papamarkou Wellner Asset Management in New York.

Investors fear that interest rates will keep climbing higher and begin to slow economic growth.

Stocks sold off for a second consecutive session, with the Dow Jones Industrial Average tumbling 180 points, or 0.7 percent, to close at 26,447. The Dow slid nearly 201 points Thursday when the 10-year government bond yield initially hit a seven-year high.