By Greg Heym, Brown Harris Stevens Chief Economist and host of Crossing The Line
Today, we celebrate a double shot of good news, a blow away jobs report, and the end of the port strike.
Job Growth 254,000 in September
Nope, that’s not a misprint. 254,000 jobs were added last month, which easily crushed the 150,000 Dow Jones forecast. If that wasn't enough to make you smile, employment in July and August was revised upward by 72,000. That’s especially nice since we’ve had our fill of downward employment revisions over the past several months.
Other highlights of the report:
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The unemployment rate ticked down to 4.1%.
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Average hourly earnings rose 0.4% last month and were 4% higher than a year ago. Both figures were higher than expected.
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All the employment gain last month was in full-time jobs according to the household survey. The household survey also had total employment up by 430,000 in September, which gives us even more confidence about the headline number.
I know this report seems too good to be true, especially with all the negative things said—many of which were said by me—about the labor market over the past few months.
But that tone changed earlier this week when we found out:
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The number of job openings rose to 8.04 million at the end of August.
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Initial jobless claims remain at historically low levels, while the number of continuing claims for unemployment fell.
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ADP’s September data showed a higher-than-expected increase of 143,000 private-sector jobs.
That said, even with the good news this week nobody expected job growth to be this high in September. I know some of you may ask, “Greg, can’t you do that economist thing when you spoil some of the fun of a great jobs report?”. Well, if you insist, I’ll give it a shot. A huge part of the job gain last month was in health care (+45,000), government (+31,000), and social assistance (+27,000). That means that 41% of September’s job growth was in government jobs, and private-sector industries that aren’t tied to the health of the economy. I had to reach a bit for that one.
To sum up, the labor market has been a bit shaky the past few months, but September’s great jobs report should calm things down for a few weeks. I don’t expect this will stop the Fed from cutting rates at their next meeting in November. Even if it would, October’s jobs report comes out a week before they meet, so September will be old news by then.
Port Strike Over
The International Longshoremen’s Association and the United States Maritime Alliance have agreed to a tentative deal on wages and a contract extension.
Now go online and buy some stuff!