“It was solid, not spectacular,” said Diane Swonk, an independent economist in Chicago. “The good news is that participation went up, even though the unemployment rate did, too. Regaining that ground is very important.”
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Before the report was released, economists on Wall Street looked for the economy to add 172,000 jobs in September. Revisions for July and August showed that 7,000 fewer jobs were created in those months than the Labor Department first estimated.
Given the latest figures, the Federal Reserve is still expected to delay raising interest rates until late this year, and there was little in the report to suggest that the job gains might lead to significantly higher inflation.
“There are still plenty of unemployed people out there, enough for employers to continue to hire at a substantial pace,” said Michael Gapen, chief United States economist at Barclays.
“The expansion will end before you run out of labor,” added Mr. Gapen, who estimates that the unemployment rate could drop to 4 percent by the end of 2017. The overall participation rate inched up to 62.9 percent, above the low point of 62.4 percent last September, but well below the most recent peak of 66.4 percent in early 2007.
With many prime-age workers still available to be hired — what economists and policy makers at the Federal Reserve blandly term “labor market slack” — the current pace of hiring should be able to continue with little threat of overheating the economy.
Moreover, the labor force itself jumped by nearly half a million, a bright spot in an otherwise steady picture of the economy.
The nation has added an average of 178,000 jobs a month this year, less robust than the average monthly gain of 229,000 in 2015 but still a healthy reading given the longevity of the recovery and the slowdown in population growth among adults of working age.
Mr. Gapen attributed most of September’s dip in job creation, which was below the consensus forecast and the annual average, to an unexpected 11,000 drop in government payrolls.
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The public sector added more than 50,000 positions in July and August, and Mr. Gapen said the private sector’s relative strength was what counted, not a slowdown in government hiring.
“It’s not a negative signal,” he said. “We see the miss as mainly a one-off government issue.”
Despite the robust hiring in the last couple of years, tens of millions of workers have barely felt the benefits of the recovery, and notable pockets of economic weakness remain more than seven years after it began.
Those two contrasting realities — healthy hiring and falling unemployment on the one hand, millions of economically sidelined Americans on the other — sustain the narrative of the two main presidential candidates, Hillary Clinton and Donald J. Trump.
Both candidates’ critiques of the economy contain kernels of truth. Friday’s report, while generally strong, contained fodder for both.
The jump in participation, and healthy gains in higher-paying professional services fields, bolster Mrs. Clinton’s case that the economy is growing steadily and creating decent-paying jobs. The drop in manufacturing jobs by 13,000 will underscore fears among blue-collar voters that their livelihoods are imperiled, a main factor in Mr. Trump’s appeal.
In addition to strong gains in services, the closely watched construction industry added 23,000 jobs. The housing market has been booming in many parts of the country, and like manufacturing, construction remains an important source of middle-class jobs for workers with just high school diplomas.
“I’m heartened to see that we have an unmistakable trend toward good-quality jobs,” said Labor Secretary Thomas E. Perez. “I know there’s a doom and gloom caucus out there, but they’re on a collision course with the facts.”
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Article source: http://www.nytimes.com/2016/10/08/business/economy/jobs-report-unemployment-wages.html?partner=rss&emc=rss
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