The Bureau of Labor Statistics reported that the economy added 136,000 jobs in September, after adding 168,000 in August. The 157,000 average for the last three months is considerably slower than the 179,000 average for the last year, but this slowing is expected in a tight labor market.
The September job growth led to a 0.2 percentage point drop in the unemployment rate to 3.5 percent, a fifty-year low. The employment-to-population ratio (EPOP) rose 0.1 percentage point to 61.0 percent, a new high for the recovery that is 0.6 percentage points above the year-ago level.
The EPOPs for both prime-age (ages 25 to 54) men and women rose by 0.1 percentage point in September. The 74.0 percent rate for women is a new high for the recovery, although still below the peak of 74.9 percent hit in April of 2000. The 86.4 percent rate for men is 0.3 percentage points below the March level and 1.6 percentage points below the prerecession peak.
The unemployment rate for Hispanics fell to 3.9 percent, the lowest on record, 0.6 percentage points below the year-ago level. The unemployment rate for workers without a high school degree also fell sharply to 4.8 percent, 0.8 percentage points below the year-ago level. The share of unemployment due to voluntary quits, a measure of workers’ confidence in their labor market prospects, jumped 1.7 percentage points to 14.6 percent, a level more typical for a strong labor market.
Other data in the household survey were more mixed. While the mean duration of unemployment spells edged down 0.1 weeks to 22.0 weeks, the median duration rose 0.5 weeks to 9.4 weeks. The share of long-term unemployed also rose by 2.1 percentage points to 22.7 percent.
The number of involuntary part-time workers edged down by 31,000. The number of workers choosing to work part-time also fell, dropping by 124,000 in September. The percentage of the workforce choosing to work part-time has been dropping over the last year, after rising sharply following the implementation of the ACA. This likely due to workers having greater difficulty getting health care outside of employment.
Another negative item is an increase in the number of multiple job holders, especially among women. The share of employed women who have multiple jobs rose to 5.9 percent, 0.5 percentage points above the year-ago level. The vast majority of these women report that they work a second job in addition to a full-time job.
The picture on the establishment side is more negative. Slower job growth is to be expected in a tighter labor market, but it has virtually stopped altogether on the goods-producing side. The goods-producing sector has added a total of just 2,000 jobs over the last three months, with construction adding 8,000 jobs, manufacturing adding 4,000, and mining and logging losing 10,000. A big part of this is the fallout from the trade war and the resulting drop in investment. Also, lower world oil prices are a big hit to the mining sector. The manufacturing share of private sector employment sunk to a new all-time low in September of 9.96 percent.
On the service side, job growth in the high-paying professional and technical services sector has slowed sharply in the last two months, added an average of 13,900, compared to an average of 23,900 over the last year. Restaurant employment has also slowed sharply, with the sector adding an average of just 1,500 jobs over the last four months. This should be expected in a tight labor market, where workers have higher-paying options. Retail lost 11,400 jobs in September, bringing its losses over the last year to 60,900, just under 0.4 percent of total employment.
A big job gainer in recent months is health care, which added 38,800 jobs in September after adding 37,200 in August. The sector has accounted for almost a third of job growth in the private sector over the last two months.
In contrast to the evidence of a tight labor market in the household survey, wage growth appears to be slowing slightly. The average hourly wage rose 2.9 percent over the last year, although the annualized rate of wage growth, comparing the last three months (July, August, September) with the prior three months (April, May, June), was a slightly higher 3.4 percent.
This is a generally positive report with some serious warning signs. The goods sector is very weak and likely to get weaker, according to a wide variety of measures of manufacturing. The evidence of slowing wage growth is also striking in a labor market with 3.5 percent unemployment.