Slowing Job Growth Still Leads to 49-Year Unemployment Low
The U.S. economy had something to celebrate last month as unemployment reached its lowest level in nearly 49 years. Sitting at just 3.7%, this unemployment rate hasn’t been seen since December of 1969. However, as CNN notes, sharing the headline with this impressive accomplishment is that fact that the number of jobs added in September fell below expectations.
Last month the economy added 134,000 jobs, which is also below the monthly average observed so far in 2018. One potential reason for this miss — and the one cited by the Labor Department — is Hurricane Florence. That much-watched storm brought massive flooding to the Carolinas and other parts of the East Coast, likely leading businesses in those areas to temporarily shift their priorities from job creation to safety and protection. Additionally the Department noted evidence that the storm contributed to employment in the leisure and hospitality sector falling slightly.
Despite the lower-than-average growth for the month, it should be noted that the monthly average for the year climbed even higher thanks to positive revisions from July and August. In total the economy added 87,000 more jobs during those summer months than previously reported, bring the new average to 211,400.
Following a 2.9% year over year increase in wage growth observed in August, September’s numbers were off slightly, recording a 2.8% YOY increase. Still that puts the month ahead of the average for the year. Moreover Axios notes that every industry has seen a YOY increase in average hourly earnings, with the overall average now at $27.24 an hour. Then again, these figures aren’t adjusted for inflation, so the on-paper wage growth may differ from the practical experience of workers.
Of course you can’t talk about falling unemployment and wage growth without mentioning the observed skilled worker shortage. This is something that, even at a time of record optimism, continues to be a problem, especially for small businesses. As the hiring market becomes more competitive, wage growth is expected to continue increasing due to companies raising compensation as a way to attract talent. Additionally, Amazon’s big announcement that it was increasing its minimum wage to $15 an hour could also cause a ripple effect among employers, further lifting wages.
All in all, September brought another strong jobs report even if it did trail behind the yearly average. Of course the fact that unemployment is at its lowest level in nearly five decades is certainly notable as well. Looking ahead, expect wage growth to pick up some as hiring grows more competitive and watch to see if this month’s slowing can really be attributed to the Hurricane or signals a slight shift in trend.