Washington, DC, USA: Payrolls fell short of expectations at 134000 in September compared with the 185,000 median estimate in a survey of economists and the unemployment rate declined to 3.7 percent, U.S. Bureau of Labor Statistics figures showed Friday.
Job gains occurred in professional and business services, in health care, and in transportation and warehousing.
Household Survey Data
The unemployment rate declined by 0.2 percentage point to 3.7 percent in September, and the number of unemployed persons decreased by 270,000 to 6.0 million. Over the year, the unemployment rate and the number of unemployed persons declined by 0.5 percentage point and 795,000, respectively.
Among the major worker groups, the unemployment rates for adult women (3.3 percent) and Whites (3.3 percent) declined in September. The jobless rates for adult men (3.4 percent), teenagers (12.8 percent), Blacks (6.0 percent), Asians (3.5 percent), and Hispanics (4.5 percent) showed little or no change over the month.
The number of long-term unemployed (those jobless for 27 weeks or more) was little changed at 1.4 million over the month; these individuals accounted for 22.9 percent of the unemployed.
In September, the labor force participation rate remained at 62.7 percent, and the employment-population ratio, at 60.4 percent, was little changed.
The number of persons employed part time for economic reasons (sometimes referred to as involuntary part-time workers) increased by 263,000 to 4.6 million in September. These individuals, who would have preferred full-time employment, were working part time because their hours had been reduced or they were unable to find full-time jobs.
In September, 1.6 million persons were marginally attached to the labor force, essentially unchanged from a year earlier. (Data are not seasonally adjusted.) These individuals were not in the labor force, wanted and were available for work, and had looked for a job sometime in the prior 12 months. They were not counted as unemployed because they had not searched for work in the 4 weeks preceding the survey.
Among the marginally attached, there were 383,000 discouraged workers in September, about unchanged from a year earlier. (Data are not seasonally adjusted.) Discouraged workers are persons not currently looking for work because they believe no jobs are available for them. The remaining 1.2 million persons marginally attached to the labor force in September had not searched for work for reasons such as school attendance or family responsibilities.
Establishment Survey Data
Total nonfarm payroll employment rose by 134,000 in September, compared with an average monthly gain of 201,000 over the prior 12 months. In September, job gains occurred in professional and business services, in health care, and in transportation and warehousing.
Employment in professional and business services increased by 54,000 in September and has risen by 560,000 over the year.
Health care employment rose by 26,000 in September. Hospitals added 12,000 jobs, and employment in ambulatory health care services continued to trend up (+10,000). Over the year, health care employment has increased by 302,000.
In September, employment in transportation and warehousing rose by 24,000. Job gains occurred in warehousing and storage (+8,000) and in couriers and messengers (+5,000). Over the year, employment in transportation and warehousing has increased by 174,000.
Construction employment continued to trend up in September (+23,000). The industry has added 315,000 jobs over the past 12 months.
Employment in manufacturing continued to trend up in September (+18,000), reflecting a gain in durable goods industries. Over the year, manufacturing has added 278,000 jobs, with about four-fifths of the gain in the durable goods component.
Within mining, employment in support activities for mining rose by 6,000 over the month and by 53,000 over the year.
Employment in leisure and hospitality was little changed over the month (-17,000). Prior to September, employment in the industry had been on a modest upward trend. Some of the weakness in this industry in September may reflect the impact of Hurricane Florence.
Employment showed little or no change over the month in other major industries, including wholesale trade, retail trade, information, financial activities, and government.
The average workweek for all employees on private nonfarm payrolls remained unchanged at 34.5 hours in September. In manufacturing, the workweek edged down by 0.1 hour to 40.8 hours, and overtime edged down by 0.1 hour to 3.4 hours. The average workweek for production and nonsupervisory employees on private nonfarm payrolls was unchanged at 33.7 hours.
In September, average hourly earnings for all employees on private nonfarm payrolls rose by 8 cents to $27.24. Over the year, average hourly earnings have increased by 73 cents, or 2.8 percent. Average hourly earnings of private-sector production and nonsupervisory employees increased by 6 cents to $22.81 in September.
The change in total nonfarm payroll employment for July was revised up from +147,000 to +165,000, and the change for August was revised up from +201,000 to +270,000. With these revisions, employment gains in July and August combined were 87,000 more than previously reported. (Monthly revisions result from additional reports received from businesses and government agencies since the last published estimates and from the recalculation of seasonal factors.) After revisions, job gains have averaged 190,000 per month over the last 3 months.
Market Reaction – Stocks fall globally after U.S. jobs data, Treasury yields rise
Major world stock markets sank for a second straight day on Friday after strong U.S. jobs numbers signaled a continued tightening of the labor market and increased inflation pressures, while Treasury yields rose again to multi-year highs.
The increase in U.S. non-farm payrolls slowed in September, likely from Hurricane Florence’s impact on restaurant and retail payrolls, but the Labor Department report also showed a rise in wages that could keep the Federal Reserve on track for more interest rate hikes.
“The jobs report has become a inflation report,” said Russell Price, senior economist at Ameriprise Financial Services Inc in Troy, Michigan.
The Dow Jones Industrial Average fell 180.43 points, or 0.68 percent, to 26,447.05, the S&P 500 lost 16.04 points, or 0.55 percent, to 2,885.57. The Nasdaq Composite dropped 91.06 points, or 1.16 percent, to 7,788.45, marking its first weekly percentage decline since march.
The pan-European FTSEurofirst 300 index lost 0.86 percent and MSCI’s gauge of stocks across the globe shed 0.67 percent.
A steep sell-off in U.S. Treasury bonds that started midweek and pushed 10-year yields to seven-year highs has weighed on stocks and rippled through bond markets globally. (GRAPHIC-Global assets in 2018: tmsnrt.rs/2jvdmXl)
“This week has been a bit of a bloodbath on the fixed income side of things,” said Dean Popplewell, chief currency strategist at Oanda in Toronto. “I think the market moves in the bonds this week side-swiped a lot of individuals.”
The 30-year Treasury bond reached a four-year high of 3.424 percent, up 7 basis points from late Thursday. The benchmark 10-year yield rose to 3.248 percent, up 5.3 basis points from late Thursday.
The U.S. bond market will be closed on Monday for the Columbus Day holiday, but stock markets will open.
In the currency market, the U.S. dollar weakened in choppy trading. The dollar index fell 0.1 percent The euro was up 0.02 percent to $1.1515.
The Japanese yen strengthened 0.17 percent versus the greenback at 113.73 per dollar, while Sterling was last trading at $1.3114, up 0.74 percent on the day.
Fears about Italy’s finances pushed Milan stocks down 1.3 percent, while London’s FTSE, Frankfurt’s DAX and the CAC in Paris were off 0.95 to 1.4 percent.
In oil, crude futures steadied on Friday after climbing to four-year highs earlier this week, and both benchmarks marked weekly gains ahead of U.S. sanctions on Iranian oil exports.
U.S. crude futures settled at $74.34 per barrel, up 0.001 percent, and Brent settled at $84.16, down 0.50 percent for the day.
At around four-year highs, oil prices have triggered concerns about demand as U.S. President Donald Trump has blamed the Organization of the Petroleum Exporting Countries for rising gasoline prices for American consumers.
Prices have eased slightly after Saudi Arabia and Russia said they would raise output to at least partly make up for expected disruptions from Iran, OPEC’s third-largest producer, due to the U.S. sanctions that take effect on Nov. 4.
The combination of rising oil prices, borrowing costs and a climbing U.S. dollar have also been rocking emerging markets, which tend to be vulnerable to all three.
Emerging market stocks lost 0.98 percent, closing at a 17-month low.
Nonfarm Payroll (NFP) Report
The Nonfarm Payroll (NFP) report is released on the first Friday of every month at 8:30 AM ET (Eastern Time) by the U.S. Bureau of Labor Statistics. NFP is a highly anticipated economic report which signals the strength of the US economy. It reveals the health of the jobs market, which filters down into inflation
It is closely analysed to predict Gross Domestic Product (GDP) growth and inflation rates and has the power to move global financial markets.
Economic indicators in the NFP report that markets and policy makers care about the most are Non-Farm Employment Change, Average Hourly Earnings and the Unemployment Rate:
Non-Farm Employment Change
Non-Farm Employment Change measures change in the number of employed people during the previous month, excluding the farming industry. Job creation is an important leading indicator of consumer spending, which accounts for a majority of overall economic activity
Average Hourly Earnings
The wages growth data, Average Hourly Earnings, measures change in the price businesses pay for labor, excluding the farming industry. It’s a leading indicator of consumer inflation – when businesses pay more for labor the higher costs are usually passed on to the consumer;
Unemployment Rate measures the percentage of the total work force that is unemployed and actively seeking employment during the previous month.
Although it’s generally viewed as a lagging indicator, the number of unemployed people is an important signal of overall economic health because consumer spending is highly correlated with labor-market conditions.
Unemployment is also a major consideration for those steering the country’s monetary policy, especially the Federal Open Market Committee, FOMC.