September BLS Report: Unemployment Drops to Lowest Since 1969, But Wage Growth Disappoints
The latest jobs numbers are out from the Bureau of Labor Statistics. What do they mean for job seekers, employers and investors? Here’s a quick take from Glassdoor Senior Economist Daniel Zhao:
This morning’s jobs report was a reassuring sign that the labor market is still chugging along. The unemployment rate dropped 0.2 percentage points to 3.5 percent, its lowest point in 2019 and the lowest since 1969. The drop in the unemployment rate beat expectations and signals that labor market fundamentals are still healthy. On the flip side, however, wage growth missed expectations, sending mixed signals about the health of the labor market for workers.
Payroll gains reached a respectable 136,000 jobs added—below the average for 2019, but still above the 100,000 needed to keep up with population growth. Crucially, August’s payrolls added were revised up from 130,000 to 168,000, a gain that reverses some of the pessimism about the labor market slowdown following last month’s report.
The labor force participation rate was unchanged at 63.2 percent. Similarly, the employment-population ratio moved up by 0.1 percentage point to 61.0 percent. Both numbers have been trending up slightly over the last few months, running against demographic headwinds to indicate that there are still workers for employers to draw in off the sidelines.
Wage growth was a surprising disappointment in this month’s numbers. Annual growth in average hourly wage earnings dropped to 2.9 percent from 3.2 percent in August and following what had seemed to be a small acceleration in the last few months. Wage growth is now at its lowest level since July 2018. This extends a disappointing streak of slowing wage gains at a time when the historically tight labor market should be boosting wages for workers.
Health care has increasingly carried the labor market in 2019, and that was reflected in today’s report. Health care and social assistance added 41,400 jobs, almost a third of all jobs added in September. Temporary help services also added 10,200 jobs in September. These workers are often the first to be cut when businesses are wary of an impending slowdown, so the healthy print is a good sign that employers are still confident in the economic expansion.
Transportation and warehousing also added 15,700 jobs, as the holiday hiring season kicks off, and employers prepare for the anticipated growth in demand for transportation from the explosion of e-commerce. By contrast, retail shed 11,400 jobs as retailers follow the shift in consumer demand online.
Manufacturing lost 2,000 jobs, following back-to-back weak monthly reports from the ISM. Glassdoor’s Job Market Report also showed a 15 percent drop in manufacturing job openings in September as the manufacturing sector grapples with the effects of the trade war.
Government also added only 22,000 jobs in September, a small bump indicating that Census hiring did not contribute very much to this month’s numbers. The Census Bureau reported they expect to wrap up address verification by mid-October, so we may already be seeing the bump in Census hiring for 2019 fade.
Ultimately, this report signals that the good times aren’t over yet—the labor market still has room to grow as unemployment hits new lows and more workers join the labor force. This validates the Federal Reserve’s view that a strong labor market is continuing to support the economy and may embolden hawks who don’t want another rate cut in October. The drop in wage growth is a surprise, however, and is a sign that the longest economic expansion in history is still not benefiting workers as much as economists would expect.
To speak with Daniel Zhao about today’s jobs report or to discuss labor market trends, contact pr at Glassdoor dot com. For the latest economics and labor market updates, follow @danielbzhao on Twitter and subscribe to Glassdoor Economic Research.