The American economy gained 263,000 jobs last month. We need 90,000 new jobs just to keep up with population growth, which means that net job growth clocked in at 173,000 jobs. The headline unemployment rate edged back down to 3.5%.
This is a pretty mediocre jobs report—although that depends on how you look at things. In terms of raw numbers, it's so-so. On the other hand, given the state of the economy it's not so bad.
In the details, 261,000 workers exited unemployment and got jobs but the labor force dropped by 57,000, for a new job gain of 204,000 jobs. At the same time 229,000 people left the labor force. The reduction in unemployment to 3.5% was due about in half to more jobs and about half to the shrinking labor force.
As usual, services led the way with 244,000 new jobs compared to only 44,000 for goods-producing jobs. The biggest gainer was leisure and hospitality, which added 83,000 jobs in September.
Among blue-collar workers, hourly wages increased a healthy 4.4%. Given the likely low inflation rate in September, that will probably turn out to be in the range of 3.5-4.5% in real terms. Weekly earnings went up a bit more than that due to slightly increased average hours worked per week.
Blue-collar workers have snapped a two-year decline in hourly wages with small pickups in August and September, mainly due to very low inflation rates. But they've overshot the decline needed to get back on their prepandemic trendline and are now about 1% below where they should be. This continues to be good news for inflation hawks who are scared that higher wages are propping up inflation rates.
Altogether this is a pretty good jobs report, though not a barn burner. If there's any justice, it should make the Fed fairly happy.
Pay increases? Who do these little people think they are?
Jerome needs to turn the screws a bit tighter.
This is exactly right. My work friend from whom I've now won two bets on predicting St. Jerome's behavior won't bet with me anymore, so I need a new sucker.
+.75 next time around, who wants the under?
"[increase in hourly wages] will probably turn out to be in the range of 3.5-4.5% in real terms."
I suppose this is the month/month number - anyway real wages did turn up a little in the last months. But Kevin's graph shows that overall real wages have been on a downward trend since 2020. The long-term trend that Kevin draws ignores the lack of real wage growth since then. With a looming recession the prospects for real wage growth are not looking good at all. Even if inflation eases there is little prospect of real wages consistently increasing at 4%.
As for the effect of wages on inflation, this is a totally phony concern - inflation is due to other factors. Real wages have actually increased at substantial rates in the past - especially before the 70's - without causing inflation.
Powell won't be happy until unemployment is at least a 5% and rising.
FWIW, any Fed rate increases won't be completely visible for a few more months.
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