October 7, 2019 — Labor Data for September is a Bit Disappointing


US economy added 135,000 new jobs in September, missing expectations for 145,000 jobs. However, numbers for past months were revised upward. August jobs are rose to 168,000 from an initial estimate of 130,000, while July was increased to 166,000 from 159,000.  It’s a net gain of 45,000 positions.

The bright note was that September unemployment rate fell to a nearly 50-year low at 3.5%. 

Average hourly earnings climbed 2.9% from a year earlier. It was the lowest monthly increase in wages since July 2018. There is no sign investors need worry about inflation, wages are growing, but at a more moderate pace than earlier this year when average hourly wages rose by the most since 2009.

The Federal Reserve officials pay attention to job numbers to gauge how the economy is performing. Low unemployment rate indicates economic strength, but the weakness in wage growth shows the Fed remains far from its goal of an inflation rate around 2%.  The Fed meets October 29-30, with markets expecting another quarter-point rate cut with a 79% probability. Fed fund futures shows the market is pricing in a 42% chance to central bank will lower its benchmark interest rate two more times before the end of the year, up about 20% from a week ago.