The Economy Did Not Add Very Many Jobs in September

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Friday’s jobs report is a bit unpleasant. Employers added just 142,000 workers to their payrolls in September, and unemployment remained flat at 5.1 percent. After holding steady for three straight months, the labor force participation rate dropped down to a new 38-year low. Hourly wages actually fell slightly over the month. The government also revised down its estimates for job growth in July and August. Econ Twitter spent the morning collectively grimacing at the numbers, the sentiment captured in this all-caps tweet from Neil Irwin of the the New York Times

There really isn’t much of one. But it’s also a little early to draw any hard conclusions about whether the job market is actually down-shifting to slower growth. A few thoughts:

1) Recent labor market data has been pretty worrisome. For the first half of the year, the U.S. averaged 213,000 new jobs per month. In July, it added a healthy 223,000. But these past two months, the country has averaged just 139,000. That sounds ominous—like a potential sign the global troubles we’ve watched radiate from China and other emerging markets might be starting to touch not just stocks, but the real economy here in the U.S. That said, the job market has suffered through similar cold snaps before warming up again, and it’s always possible we’re looking at a blip. Also, remember, September’s figures are going to be revised.

2) Still, this seems to validate the Federal Reserve’s decision not to raise interest rates last month. It’s really, really hard to tell exactly what’s going on with the economy at this moment, and if nothing else, Friday’s report is evidence that we can’t assume the labor market will just keep barreling along. With inflation going nowhere and job creation in limbo, it’s really, really hard to find a strong justification for central bank tightening at this precise moment.

3) Even if the slowdown is just temporary, the labor market is way behind its pace from last year. As of September 2014, the economy was adding an average of 238,000 new jobs per month. The average for 2015 so far is 198,000, closer to what we saw in 2013.

So, this is the kind of jobs report that should make you feel ill at ease. It’s just hard to say anything more concrete than that.