At 156,000, September Job Gains Steady
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.