In September, the unemployment rate declined to its lowest level in nearly 49 years. However, job additions came in significantly below expectations, even though the broader employment picture remained robust. Further, even though September’s numbers missed targets, the figures for July and August were revised upward. Also, the labor force participation rate remained unchanged.
Meanwhile, the pace of wage growth declined year over year. However, the metric is widely expected to exceed 3% as firms compete to hire an ever smaller pool of workers. Once again, professional and business services led job gains. This is why it makes sense to add stocks from this domain to your portfolio.
Unemployment Lowest Since 1969
Though job additions for September came in under most expectations, the unemployment rate declined from 3.9% to 3.7%. This is the lowest level registered since December 1969 and lower than the estimated rate of 3.8%. The U6 unemployment rate, that includes people forced into part-time work and people only sporadically looking for jobs, also inched up from 7.4% to 7.5%.
However, this is still a considerably low level. More significantly, the decline in unemployment was not due to a contract in the labor pool. The civilian labor force expanded by 150,000. Additionally, the labor force participation rate remained unchanged at 62.7%. But the number of individuals who aren’t considered part of the labor force did rise by 74,000 to around 96.4 million.
Professional and Business Services Lead Gains
The economy added 134,000 jobs in September, significantly lower than the consensus estimate of 183,000. This is the smallest number of job additions over the last 12 months. Most economists attributed last month’s sub-par job gains to the impact of Hurricane Florence. This was visible in the decline of leisure and hospitality jobs, which shrunk by 17,000.
But job additions for July and August were revised upward by a combined 87,000. While July’s job additions were increased from 147,000 to 165,000, August’s gains were revised upward to 270,000 from 201,000. Notably, monthly job additions have averaged 201,000 over the past one year and 190,000 over the last three months.