The Labor Department released its employment report Friday morning, and the news was disappointing to many — job growth slowed sharply last month and wages were flat as employers cut back sharply on hiring in September. They also added fewer jobs in July and August than previously thought, a sour note for a labor market that had been steadily improving. However, economists predict a sunnier picture in California.
Manufacturing, oil drilling cuts hold back US economy
The economy added just 142,000 jobs last month, depressed by job cuts by manufacturers and oil drillers. The unemployment rate stayed 5.1 percent, but only because many Americans have stopped looking for work and are no longer counted as unemployed. The proportion of adults either with a job or looking for one is at a 38-year low.
Friday's tepid jobs report from the government suggested that the U.S. economy, which has been outshining most others around the world, is weakening. Lackluster growth overseas has reduced exports of U.S. factory goods. China, the world's second-largest economy after the United States, is slowing. Europe is struggling. Emerging economies from Brazil to Turkey are straining to grow at all.
The dollar has risen about 15 percent against overseas currencies in the past year, making U.S. goods costlier overseas and imports less expensive. Lower exports likely helped hold growth in the July-September quarter to a meager 1.5 percent annual rate, according to economists from JPMorgan Chase. In addition, sharply lower oil prices have led U.S. drilling firms to lay off workers and slash spending on equipment.
Better news expected in California
September’s jobs numbers for California will not be released for another two weeks. But this week, UCLA Anderson economists released their forecast for the next few years. They predicted California will continue to outpace the rest of the nation when it comes to job growth.
Part of the reason why is California fell hardest during the recession, so it has more to make up, which it’s doing – powered by tech jobs in Silicon Valley, which most people know about. Less known is that the Inland Empire also has one of the fastest rates of job growth in the state.
California’s unemployment rate is still a percentage point lower than the nation’s. By 2017, the forecast says the California and U.S. rates will be the same: 5.8 percent, which would match the level of unemployment before the Great Recession.
— Ben Bergman/KPCC
Federal Reserve still considering whether to raise rates
The tepid pace of hiring complicates the picture for the Federal Reserve, which is considering whether to raise interest rates from record lows. Fed Chair Janet Yellen has said that the job market is nearly healed. But she has also said she wants to see further hiring and pay growth to provide reassurance that inflation will move closer to the Fed's target of 2 percent.
Average hourly wages slipped by a penny in September and have now risen by only 2.2 percent in the past year.
"Every aspect of the September jobs report was disappointing," said Michelle Girard, an economist at RBS Securities. It "strengthens the case that the Fed will be forced to stay on hold over the remainder of the year."
Stock index futures and bond yields fell after the payroll figures were released at 8:30 a.m. Eastern time. The yield on the 10-year Treasury note fell to 1.96 percent from 2.04 percent shortly before the job survey was released.
The shrinking of the U.S. labor force — the number of people either working or looking for work — reflects in part the first wave of retirements of the vast baby boom generation. But it also signals that many Americans remain discouraged about their job prospects. Modest growth and steady, if unspectacular, hiring hasn't encouraged more people to look for work.
Though the overall job market has lost some vigor, U.S. consumers are spending at a healthy pace and boosting job growth in sectors like retail and hotels and restaurants. But lackluster growth overseas has sharply reduced exports of factory goods.
So far this year, job gains have averaged 198,000 a month this year, a solid total, but below last year's average of 260,000.
Last month, construction companies added 8,000 jobs and professional services, which includes accounting and architects, gained 31,000. Government added 24,000. But financial services reported no gain. And hiring in education and health fell to its lowest level in nearly a year.
This story has been updated.