The sky is not falling. The clanging alarm bells can be quieted. Recession fears can be put aside for at least another month. The big picture: Those are the implications of an excellent September jobs report that points to the U.S. labor market remaining resilient and throws cold water on a more worrying picture that had emerged in data over the summer. - There has been tension lately between labor market alarmists focused on cracks emerging in the data (a camp we've tended to be part of) and the view, embraced by most Federal Reserve officials, that the job market is basically fine. The new numbers support the latter story.
Driving the news: Employers added 254,000 jobs last month, the Labor Department said, as it also revised up July and August numbers by a combined 72,000 positions. - As of 8:29am, average job creation over the previous three months was a lackluster 116,000. The release of the September number and revisions bump that to a robust 186,000.
- The new report also showed a dip in the unemployment rate to 4.1%, back to its June level following what had been an alarming spike in July. It looks even better going out a couple more decimal places, at 4.051 — a hair away from rounding down to 4%.
Between the lines: What had appeared to be a summer slump in the job market now looks more ambiguous — and possibly just a head fake. - The great fear, following that weak July jobs report, was that the gradual upward movement in unemployment over the course of the year would keep going, even toward recession territory.
- But an economy that adds 254,000 jobs in a month with a falling unemployment rate is not in recession and, historically speaking, not particularly close to one.
What they're saying: "The labor market has plenty of room to run as it looks to stay in its Goldilocks phase," wrote Noah Yosif, chief economist at the American Staffing Association. - He added that "unemployment is not too high, nonfarm payroll growth is certainly not too low, and compensation is just right."
Of note: There is one more jobs report before election day, due out Nov. 1, and it could be a messy one. It will likely be affected by the Boeing strike and Hurricane Helene. - Samuel Tombs, chief U.S. economist of Pantheon Macro, noted that the survey response rate on which the jobs numbers are based was unusually low this month, which "waves a red flag" potentially presaging future negative revisions.
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