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At 156,000, September Job Gains Steady

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More than six years into expansion, the labor market continued to add jobs in September. The Labor Department reported on Friday that nonfarm payrolls increased by 156,000 positions in September. Hiring has now averaged 178,000 new positions per month over the past nine months. However, the September gain was less than the 175,000 positions consensus projection and was down from an upward revised gain of 167,000 in August (originally reported as 151,000). The year-to-date average was also down from average monthly gains of 229,000 in 2015. 

Job gains were led by the professional and business services sectors and health care. Employment in healthcare increased by 33,000 positions in September.  Over the past 12 months, healthcare has added 445,000 jobs. 

The unemployment rate rose 10 basis points to 5.0% from 4.9% in August. The unemployment rate is derived from a separate survey than the payroll employment number cited previously. The jobless rate rose for a good reason, however. It increased because the number of people actively looking for work grew more quickly than the number of people who had jobs. Indeed, the increase stemmed from a large 354,000 gain in jobs which was offset by an even larger increase in the labor force of 444,000 positions. Over the past year, the labor force has grown by 3 million people, the largest 12-month gain since 2000. The gains suggest discouraged workers who had dropped out of the labor force may be re-entering, provide a further boost to economic growth.

The labor force participation rate, which is a measure of the share of working age people who are employed or looking for work, rose to a six-month high of 62.9% in September due to the jump in the labor force. Nevertheless, it remains low by historic standards.

Average hourly earnings for all employees on private nonfarm payrolls increased by six cents to $25.79 in September. Over the year, average hourly earnings have risen by 2.6%, stronger than inflation. This measure of wage growth is starting to accelerate. Average hourly earnings increased 2.3% in 2015 and 2.1% in 2014. Increases in minimum wage rates in many states may start to put further pressure on this measure of earnings. 

The September jobs report continues to paint a picture of a strong labor market and may add fodder to those within the Federal Open Market Committee (FOMC) who believe the broad economy is strong enough to withstand an additional increase in the federal funds rate. In December 2015, the Fed raised its benchmark interest rate 25 basis points, the first increase since the financial crisis. There has been much discussion of further increases since that time, but there has not yet been one. 

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About the Author

Beth Burnham Mace

Beth Burnham Mace is the Chief Economist and Director of Outreach at the National Investment Center for Seniors Housing & Care (NIC). Prior to joining the staff at NIC, she served as a member of the NIC Board of Directors for seven years and chaired NIC’s Research Committee. Ms. Mace was also a Director at AEW Capital Management and worked in the AEW Research Group for 17 years. Prior to joining AEW in 1997, Ms. Mace spent ten years at Standard & Poor’s DRI/McGraw-Hill as the Director of the Regional Information Service. She also worked as a Regional Economist at Crocker Bank, the National Commission on Air Quality, the Brookings Institution and Boston Edison.

Ms. Mace is a member of the National Association of Business Economists (NABE), the Urban Land Institute (ULI), ULI’s Senior Housing Council and New England Women in Real Estate (NEWIRE/CREW). In 2014, she was appointed a fellow at the Homer Hoyt Institute and was awarded the title of a “Woman of Influence” in commercial real estate by Real Estate Forum Magazine and Globe Street. Ms. Mace is a graduate of Mount Holyoke College (B.A.) and the University of California (M.S.). She has also earned The Certified Business Economist™ title (CBE) from the National Association of Business Economists (NABE). Ms. Mace is often cited in the Wall Street Journal, the New York Times, Seniors Housing Business, Seniors Housing News and McKnight’s Senior Living and has a bi-monthly column in the National Real Estate Investor.
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