WASHINGTON – United States private hiring was less than forecast in September as wage gains cooled, offering a warning that the record-long expansion may be starting to falter even as the jobless rate fell to a half-century low.
Private payrolls expanded by 114,000 after an upwardly revised 122,000 advance the prior month, according to a Labor Department report Friday that missed the median estimate of economists for a 130,000 gain. Total nonfarm payrolls climbed a below-forecast 136,000, which was boosted by 1,000 temporary government workers to prepare for the 2020 Census count.
Building a Strong Data Foundation in the Age of AI
Artificial intelligence (AI) has become a key priority in the boardroom and across management —…
Learn More
Average hourly earnings rose 2.9% from a year earlier, the weakest in more than a year and missing estimates. The jobless rate unexpectedly dropped to 3.5% from 3.7%, for the lowest since December 1969.
The unexpectedly shaky report boosts the case for the Federal Reserve to make a third-straight interest-rate cut later this month. The downbeat reading also adds to signs President Donald Trump’s trade policy and weakness abroad pose an increasing threat to growth in the world’s largest economy, though the unemployment rate decline will offer him a chance to boast about economic gains.
The jobs report caps a week of U.S. economic data that whipsawed stocks and sent already-low Treasury yields tumbling, led by a key manufacturing gauge that sank deeper into contraction with the worst reading in a decade. A slowdown also threatens Trump’s re-election prospects next year, with the president frequently staking his message on a strong economy.
Investors expect the central bank to cut interest rates when the committee next gathers Oct. 29-30. The report will may further fuel betting that the Fed will cut rates more aggressively, with some economists seeing easing at this year’s two remaining meetings in October and December.
The data offer a contrast with characterizations by Fed Chairman Jerome Powell and his colleagues at recent meetings that job gains have been “solid.’’ Late Thursday, Fed Vice Chairman Richard Clarida said the economy remains on solid footing and recession risks aren’t “particularly elevated under appropriate monetary policy.”
Powell is scheduled to deliver opening remarks at 2 p.m. in Washington at a Fed event, followed by comments from governors Lael Brainard and Randal Quarles.
Revisions were a bright spot, adding 45,000 jobs for the prior two months, though the three-month average still fell to 157,000 from 171,000.
The job gains were concentrated in health care and professional and business services. Retail employment contracted for an eighth-straight month, while construction payroll growth remained tepid.
Manufacturers subtracted 2,000 jobs, continuing a trend toward weaker growth. It likely reflects the slowdown at factories, seen also in data from the Institute for Supply Management, which points to slower production and orders amid weakening demand for goods.
Factory employment may be poised to fall further in coming months with General Motors Co. workers on strike. About 46,000 employees walked out Sept. 15, which was too late in the month to be captured in the Labor Department’s survey though may affect readings for October. At the same time, the strike may already be impacting wages and hours worked.
Average hourly earnings were little changed from the prior month, missing estimates for a gain, while the 2.9% annual wage gain fell below all estimates in Bloomberg’s survey of economists.
Economists surveyed by Bloomberg had projected 145,000 new jobs with the unemployment rate remaining at 3.7% and average hourly earnings rising an unchanged 3.2%.
Katia Dmitrieva is a reporter for Bloomberg News.
