US unemployment rate falls to 3.5%; job growth steady

Andrew Cummings
October 5, 2019

United States job growth increased moderately in September, with the unemployment rate dropping to near a 50-year low of 3.5 per cent, assuaging financial market concerns that the slowing economy was on the brink of a recession amid lingering trade tensions.

Nonfarm payrolls increased by 136,000 jobs last month, the government said.

Friday's jobs data underscored the benefits of a hot job market for lower-paid Americans and traditionally disadvantaged workers. Wage growth stagnated and manufacturing payrolls declined for the first time in six months.

Meanwhile, with a strong dollar and slowing global economy the U.S. trade deficit widened in August, as the trade conflicts ate into export growth.

Despite the continued moderate employment growth and sharp drop in the jobless rate, many economists still expect the Federal Reserve to cut interest rates at least one more time this year. Despite this, hiring has averaged 157,000 in the past three months, making it enough to absorb new job seekers and resulting in lower unemployment over time.

"The unemployment number is down to 3.5 percent, so that goes way, way back". Hispanic men over the age of 20 enjoyed an unemployment rate of just 3 percent last month, on par with white men over 20 at 2.9 percent.

Furthermore, the unemployment rate for Hispanics reached a record low, while the level for African Americans remained constant. Health care added 39,000 jobs last month, while professional and business services added 34,000.

With the U.S. economic expansion in its 11th year and unemployment low, many businesses have struggled to find the workers they need.

The employment figures carry more weight than usual because worries about the health of the economy are mounting. Manufacturers are struggling as businesses have cut spending on industrial machinery, computers and other factory goods. And overseas demand for USA exports has fallen sharply as Trump's trade conflicts with China and Europe have triggered retaliatory tariffs. In September, the ISM's gauge of services industry employment fell to its lowest reading since February 2014. And new orders for manufactured items slipped last month, the government reported.

Most fingers pointed squarely at the US-China trade war, which has disrupted supply chains, raised the cost of materials and hit US exports. "But even with a strong labor market, wage growth remains muted, limiting the risk that labor market tightness with push inflation meaningfully higher".

But a slump in hiring or a rise in the unemployment rate in coming months could discourage consumers from spending as freely as they otherwise might during the holiday shopping season.

The three-month average gain in private employment fell to 119,000, the smallest since July 2012, from 135,000 in August.

Investors, wracked by fears that the United States could be heading towards recession, were anxious to see if a key pillar of the world's largest economy- the jobs market- is holding up.

Americans are also buying cars at a still-healthy pace.

Other reports by iNewsToday