US payrolls add 136,000 new jobs; unemployment rate drops to 3.5%
In September, U.S. nonfarm payrolls added 136,000 new hires versus 130,000 in August, as the unemployment rate dropped to 3.5%, a 50-year low, compared with 3.7% in August, according to the Bureau of Labor Statistics. There were 5.8 million unemployed workers in September, down 275,000 from August.
Elise Gould is a senior economist with the Economic Policy Institute in Washington, D.C. "The report suggests the Federal Reserve is doing the right thing by gradually lowering interest rates to ensure the longest recovery in modern economic history can be sustained — rather than peter out just as many lower- and middle-income households are starting to feel its benefits."
Despite the record low rate of unemployment in September, average hourly earnings for all workers on private nonfarm payrolls dropped a penny after climbing 11 cents in August, according to the BLS.
A decline in the unemployment rate means, in part, that the number of job seekers is down. When the supply of workers shrinks, that strengthens their power to bargain up earnings with employers, according to standard economic theory. That outcome did not happen in September.
On the employer side of the ledger, the dynamic of declining unemployment has another consequence. For example, a shrinking pool of employment applicants can mean a falloff in the number of qualified workers. Employers can and do use hourly earnings as incentives to attract high-skilled workers.
Hiring grew most for the U.S.’ biggest firms in September, according to the Automatic Data Processing (ADP) National Employment Report, produced from ADP payroll data in conjunction with Moody’s Analytics. Companies of 500 or more employees led the way in job creation, adding 67,000 new hires in September versus 52,000 in August.
Midsize employers (50-499 workers) hired 39,000 employees in September compared with 77,000 in August. Hiring declined at small firms of 1-49 employees with 30,000 new jobs in September versus 66,000 in August. Very small businesses with 1-19 workers added 4,000 new employees in September compared with 26,000 in August.
According to the ADP/Moody’s report, the service-providing sector continued to dominate job creation, adding 127,000 new hires in September versus 184,000 in August. New workers hired in the goods-producing sector fell to 8,000 in September compared with 11,000 new jobs in August. Manufacturing firms added 2,000 new hires in September versus 8,000 in August.
As the U.S. economy expanded for the 125th straight month, an index of U.S. manufacturing from the Institute for Supply Management fell 1.3% from August to 47.8% in September, its lowest point in 10 years, and the worst since the Great Recession ended in June 2009.
Difficulties due to the U.S.-China trade war continued to plague American goods-producing firms. Economics observers are unclear when this trade conflict will subside.
As a result, uncertainty pervades the U.S. business landscape. Mark Zandi is the chief economist of Moody’s Analytics. "Businesses have turned more cautious in their hiring," he said in a statement. The nation’s smallest businesses are absorbing the worst effects of the slowdown in payroll growth, according to him.