134,000. The September job gains disappointed. But the unemployment rate dropped to 3.7 percent. And there was a sharp sell-off in China’s stock market. What does it all mean for the gold market?

Job Creation Disappoints, but Unemployment Rate Sinks to Record Low

U.S. nonfarm payrolls slowed down in September. The economy added just 134,000 jobs last month, following a rise of 270,000 in August (after an upward revision). However, the weak headline number was accompanied by hugely positive revisions in July and August. With those, employment gains in these two months combined were 87,000 higher than previously reported. In consequence, after revisions, job gains have averaged 190,000 per month over the last three months, or 208,000 through the first nine months of 2018, still significantly above the level needed for a gradual tightening of the labor market.

The gains were significantly below the expectations, perhaps reflecting the effects of Hurricane Florence, which affected parts of the East Coast in September. The job creation was widespread, but the most impressive gains occurred in professional and business services (+54,000), and in transportation and warehousing (+24,000). On the contrary, retail trade (-20,000) and leisure and hospitality (-17,000) cut jobs in September. Although the job creation disappointed in September, the annual pace of job creations increased actually in September, as the chart below shows.

_{Chart 1: U.S. unemployment rate (red line, left axis, U-3, in %) and total nonfarm payrolls percent change from year ago (green line, right axis, % change from year ago) from September 2013 to September 2018.}

The chart also displays the unemployment rate. As one can see, it sank by 0.2 percentage point to 3.7 percent, the lowest level in 48 years. Importantly, both the labor force participation rate and the employment-population ratio were little changed, so the decline in the jobless rate did not result from the discouragement of the jobseekers. The average hourly earnings for all employees on private nonfarm payrolls rose by 8 cents to $27.24. It implies that they increased 2.8 percent over the year, slightly slower than last month. However, the economists expect that the growing competition for a shrinking pool of available workers will finally boost wages in the near future.