The U.S. economy added 156,000 jobs in September after an upwardly revised August report of 167,000 net new jobs. The September number was less than the 172,000 jobs forecast by economists surveyed by Bloomberg. The official unemployment rate ticked up to 5% in the month from 4.9% in August.
But there’s nothing here to suggest that the Federal Reserve will put a December interest rate increase on hold because of the number. On the plus side, the labor participation rate moved up (to 62.9% from 6.8%) to a six-month high as un- or under-employed workers entered the workforce. That’s likely to give the Fed confidence that the job market has substantial upside momentum. Wages picked up, but less than expected. Average hourly earnings climbed by 0.2% from August (economists had projected a 0.3% gain) but with an increase inn the average workweek to 34.4 hours from 34.3 hours, the year to year increase in wages rose to 2.6% from the 2.4% for the 12-months ended in August.
And there’s a good possibility that the September numbers will get revised upwards in October. The disappointment in the overall jobs number came from a drop of 11,000 in government payrolls due to a slump in education jobs at the local level. It’s quite likely that this drop is a result of the usual difficulties in adjusting the jobs numbers for the start of the school year.
The full unemployment rate, which includes discouraged workers who have stopped searching for a job and workers in part-time jobs who would like a full time position, held steady at 9.7%.
The CME’s FedWatch, which uses the prices on the Fed Funds Futures market to calculate the odds of a move by the Federal Reserve, showed odds for a December 14 interest rate increase climbing to 70.2% today from 63.4% yesterday. Odds on a November increase fell to 10.3% from 14.5% yesterday. Historically when the market puts odds of a Fed move sat 65% or better, the Fed feels that it has adequately signaled its intentions and that it is free to move policy.