Hiring surged in September; fewer discouraged workers reported

The Labor Department’s last monthly jobs report before the November elections indicated a steadily improving U.S. economy, buoying stock traders and job market analysts on Friday.

The national unemployment rate in September slipped to a six-year low of 5.9 percent, the best since July 2008, and employers added a better-than-forecast net gain of 248,000 jobs, reversing disappointing job creation in August.

“Some months are better than others, but it’s been a very broad-based recovery, and I think we’re likely to see that recovery continue,” said Russell Price, senior economist for Ameriprise Financial.

Job creation, initially reported at 142,000 for August, was revised upward to 180,000, and the earlier July gain of 212,000 was revised up to 243,000. Revisions of preliminary employment data are made routinely each month as employers report more detailed information.

The national report, based on separate household and employer surveys, showed job gains across many sectors, even including a small uptick in government jobs, which includes public education, a sector slashed dramatically since 2008.

The jobless percentage had been reported at 6.1 percent in August. It was 7.2 percent in September a year ago. During the worst of the job market slump, in October 2009, it had hit a one-month peak of 10 percent.

Major stock indices rose on Friday after the jobs report was published; the Dow finished the day up 208 points. The U.S. dollar improved against other major currencies. And a separate report said the U.S. trade deficit shrank slightly in August.

Of particular note in the jobs report — on a day designated as national Manufacturing Day — the Bureau of Labor Statistics said the average manufacturing work week was 40.9 hours, with factory overtime edging up by a tenth of an hour to 3.5 hours a week.

The Institute for Supply Management said this week that its factory output index slipped in September from August, but its three-month average was the highest since early 2011, and the third quarter was the strongest in three years.

Meanwhile, the Labor Department reported that the average work week for all employees on private, nonfarm payrolls was 34.6 hours.

The household survey indicated that the labor force participation rate (the share of 16- to 64-year-olds working or looking for work) continued to slip lower — down to 62.7 percent, its lowest level since 1978.

That shrinking share has caused economic concern for the last five years, but a bit of companion data reported for September helped brighten the analysis. The number of discouraged workers, a survey subset who say they’ve dropped out of the labor force because there aren’t any jobs for them, dropped to 698,000 from 775,000 in August.

Economists said fewer discouraged workers suggests that the decline in labor force participation is “structural” or “secular.” In other words, it appears that working-age people are leaving the labor force by choice — to go to school, care for their families, or retire — rather than be forced out by a lack of jobs.

That said, the job market’s new normal often means that the new jobs aren’t the same as the old jobs. For example, Ford Motor Co.’s 1,200 new positions created this fall on its Transit assembly line in Kansas City pay the new hires substantially less than the compensation for established employees.

Job market recovery since the recession has been marked by increased employment in part-time, rather than full-time jobs, and by a steady surge in the number of self-employed, temporary or contract workers.

Also, the most expansive measure of unemployment, which includes workers who are involuntarily working part time because they couldn’t get full-time work, was recorded at 11.8 percent. That’s down from 13.6 percent a year ago and down significantly from its post-recession peak, but it’s still a measure of job market disappointment for some workers.

Another downside in the report: Overall wages have stayed stagnant. Average hourly earnings for all employees on private, nonfarm payrolls were down a penny from August to $24.53 an hour. That compares with $24.06 an hour in September 2013, which means earnings rose 2 percent over the year, keeping pace with inflation, but barely.

Federal Reserve Chairwoman Janet Yellen had pointed to the lid on wages and the involuntary part-timers in a September news conference. The Fed continues to watch the job market figures closely as it tapers its bond-buying program that was designed to stimulate the economy.

Nonetheless, most consumer confidence surveys and polls of human resource professionals have been registering increased confidence that the overall economy and hiring are improving.

U.S. Labor Secretary Thomas Perez said the pace of job growth indicated that the nation could be experiencing its strongest spate of private-sector job growth since 1998.

Looking ahead, some analysts said the strong September jobs report could presage good fourth-quarter sales for retailers in their most important shopping season.

This story was originally published October 3, 2014 at 4:28 PM with the headline "Hiring surged in September; fewer discouraged workers reported."