The last time the American job market was this strong, astronauts were still going to the moon.
The unemployment rate fell to 3.7% in September, the lowest level since December 1969.
The US economy added 134,000 jobs last month, below expectations and the monthly average for the year. The Labor Department said Hurricane Florence may have impacted jobs results, with leisure and hospitality employment down slightly after trending upwards over the last several months.
The good news is the previous two months’ gains were revised up by a combined 87,000 jobs, boosting the monthly average for the past year to a robust 211,400 jobs.
The historically low unemployment rate and relatively weak job growth number might indicate that employers are having an increasingly difficult time adding positions because of the availability of workers. Over the course of this year, recruiters have been more open to job candidates they may before have overlooked, such as those with criminal histories. The employment rate for people with disabilities has also jumped sharply over the past two months.
Wage growth, however, has not accelerated. Average hourly earnings rose 2.8% over the year, slightly above the average over the past year but down from last month’s increase. Those numbers are not adjusted for inflation, which has been eating into wage gains over the past several months as the Federal Reserve has hiked interest rates in response to a strengthening economy.
Other measures of income have been more positive, such as real personal disposable income (which takes taxes into account) and the employment cost index (which incorporates the cost of benefits like healthcare).
Andrew Chamberlain, chief economist of the employee review site Glassdoor, says the salaries people have been reporting through their platform show stronger growth than official measures indicate.
“It’s still relatively slow, but it’s building,” Chamberlain says, expressing confidence that the Labor Department’s hourly earnings measure will break the 3.0% threshold soon. “I’m not sure there’s much slack left to wring out of this labor market.”
Wall Street seems to agree. Bond yields spiked following the jobs report, with the benchmark 10-Year Treasury hitting 3.24% – its highest level in more than seven years.
Investors are betting that there’s no reason why the Fed won’t raise interest rates again in December and several more times next year too. Stocks tumbled as a result. The Dow fell more than 200 points in mid-afternoon trading.
The labor force participation rate, which measures the percentage of the population that is either working or looking for work, has remained essentially unchanged for the past few months.
Professional and business services remained the economy’s strongest sector, with a cumulative 560,000 jobs added over the past year. Health care and transportation and warehousing have also continued their strong gains, adding 26,000 and 24,000 jobs respectively in September.
Despite newly-imposed tariffs on steel and aluminum, manufacturing added another 18,000 jobs. The National Association of Manufacturers have attributed continued growth to regulatory rollbacks and tax cuts enacted last year, and their quarterly survey shows that 73.2% of their members report attracting a qualified workforce to be their top business challenge.
The retail sector shed 20,000 jobs, largely from garden and building material supply stores, after having showed relatively strong growth in the first half of the year.