According to the jobs report released by the Bureau of Labor Statistics on Friday, the U.S. economy added 136,000 new jobs in September, bringing the unemployment rate down to 3.5% and pushing the employment-to-population ratio for so-called prime-age workers (those aged 25-54) up further to 80.1%. The report speaks to the resilience of the U.S. labor market, even as formidable headwinds hinder growth in more vulnerable industries. Here are some key takeaways.
1. After a few slow months earlier in the year, 2019 is shaping up to be a year of slightly slower but solid job growth, particularly in the service sector.
- On average, the economy has added more than 160,000 new jobs per month this year–enough to support falling unemployment and rising participation among working-age Americans. The healthcare sector has been particularly robust, adding well over 30,000 jobs per month.
- The unemployment rate is now the lowest it has been since 1969, and the broader measure of unemployment (including those marginally attached to the labor force and those working part-time because they cannot find full-time jobs) is the lowest since 1994. The unemployment rate for Hispanics is at an all-time low of 3.9%.
2. The more volatile and vulnerable manufacturing sector lost jobs in September, but is still likely to see modest gains in 2019 overall.
- Manufacturing is far more susceptible than the larger service sector to market risks (such as contractions in foreign demand, a strengthening U.S. dollar, and declining investor confidence). These forces, combined with unpredictable tariff policies, are taking a toll on manufacturing payrolls.
- Manufacturing lost 2,000 jobs overall in September, with more manufacturing industries contributing losses than gains. This year’s manufacturing weakness stands in stark contrast to 2018’s blockbuster performance, when the sector added 264,000 jobs.
- It is worth remembering that manufacturers suffered heavier losses in 2016 and were able to bounce back in the following two years.
3. Year-over-year growth in average hourly wages continued to slow from a peak of 3.4% in February to 2.9% in September.
- The slowdown in wage growth is consistent with what we are seeing at ZipRecruiter in job postings, where growth in median advertised salaries has fallen in 19 of 27 industries this year.
- While employers are still hiring, they appear to be making more conservative offers to new hires amid uncertainty about the economic outlook and heightened fears about the risk of a possible recession.