U.S. Employment Rises Much Less Than Expected In September

U.S. Employment Rises Much Less Than Expected In September

U.S. Employment Rises Much Less Than Expected In September

At some point, analysts and observers are going to have to get comfortable with the notion that a jobs report can simultaneously be "good" and not show payroll growth in the vicinity of 200,000. Hurricane Florence probably dented hiring in some sectors as well, which should reverse in the coming months. The labor force participation rate fell by 0.2 to 62.7 percent. Teen unemployment fell by 0.3 percent to 12.8 percent. The U-6, or underemployment rate, edged up to 7.5 percent from 7.4 percent.

Markets widely expect the central bank to raise rates again in December but some analysts say markets may not have taken the Fed's expectations for next year - another three increases - into account, potentially leaving them in for a rude shock. The jobless rate's decline to a 48-year low will put that view to the test. That's the smallest gain since September 2017.

The bureau said August imports totaled $213.9 billion, also a new record. Growth was not even across all sectors, with leisure and hospitality seeing a loss of jobs to the tune of 18,000.

The job growth, though, might have been affected by Hurricane Florence, but the Labor Department isn't able to quantify the storm's impact. Friday's report revised August's count of new jobs from 201,000 to 270,000, while July's tally was revised from 165,000 new jobs. Our research shows that the potential labor supply is sizable and elastic, especially along prime working-age persons. Then, thanks to an Obama-initiated economic stimulus that some Democrats labeled necessary but inadequate, and 90 percent of Republicans flat-out opposed, the number of available jobs grew steadily, albeit with excruciating slowness over the next six years. Average hourly earnings rose 0.3 per cent from the previous month. The combination of gains in employment and moderate increases in wages is lifting disposable incomes.

Analysts polled by Refinitiv (formerly Thomson Reuters) forecast that the USA economy would add 185,000 jobs in September with the unemployment rate ticking down to 3.8 percent. The 2018 year-to-date gain is 189,000 compared to 207,000 for 2017. A separate report from the Commerce Department showed that the USA trade deficit widened in August, reflecting an increase in imports and a decrease in exports.

A cornerstone of Trump's economic policy is strengthening automobile manufacturing in the United States. The views expressed in this column are the author's own and do not reflect those of Berenberg Capital Markets, LLC.

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