Why the September Jobs Report Was So Disappointing

The already tepid August jobs level of 173,000 was revised sharply lower to 136,000, surprising analysts who had anticipated a large upward revision which is typical for that month.

Brad McMillan, chief investment officer at Commonwealth Financial Network, said “this is not what the markets were looking for, this is not what pretty much anybody expected”. (The data are not seasonally adjusted.) Discouraged workers are persons not now looking for work because they believe no jobs are available for them.

File photo of construction workers moving a piece of concrete wall with a crane on July 27, 2010 in Los Angeles, California.

Duncan said that report was sufficiently weak enough to give the Federal Reserve a reason not to raise short-term interest rates this month, or in December.

The participation rate, which indicates the share of the working-age people in the labor force, decreased to 62.4 percent from 62.6 percent.

The number of Americans in the labor force dropped to a 38-year low. The household survey was even worse than the headline establishment number, showing a decrease of 236,000 in employment. Retailers increased payrolls by 24,000. Average hourly earnings once again rose 2.2% vs. a year earlier. Pushing stocks down last quarter was the uncertainty surrounding the Fed’s rate-hike timetable, as well as the fallout from slowing economic growth in China and the resulting selloff in commodities and emerging markets.

On the basis of the figures released today, the Federal Funds Futures Rate – which is seen as an indicator of when interest rates will increase – is now suggesting that may not happen until March of 2016.

“While it’s always important not to over-react to one single data release, we’ll make an exception in this case”.

The Fed delayed a September rate rise after volatility in global markets and evidence of a slowing Chinese economy made policymakers want to be sure the US was not on the verge of a new slowdown. He noted that “we’re still creating jobs” and the economy remains in a period of moderate growth.

The majority of job gains were in health care and social assistance, which added 36,400, down from the 47,600 added in August. Trade/transportation/utilities added 39,000 jobs, but manufacturing lost 15,000, it said.

Manufacturing has been especially hard hit due mostly to a stronger dollar and a weak demand for American exports.

So far in 2015, job growth has averaged 198,000 per month, compared with an average monthly gain of 260,000 in 2014, according to the US Labor Department.

On top of September’s lackluster increase, August and July turned out to have produced fewer jobs than previously thought.

More broadly, job growth in September was still above the level needed to keep the unemployment rate trending down in the long run. Full-time jobs declined 185,000. Over the year, the unemployment rate and the number of unemployed persons were down by 0.8 percentage point and 1.3 million, respectively. Both the Nasdaq and the Standard & Poor’s 500 fell by 1.5 percent.