September 2018 Employment Situation
Submitted by Atlas Indicators Investment Advisors on October 21st, 2018
America kept adding jobs in September 2018 according to the Bureau of Labor Statistics. Their employment situation report tallied 134,000 net new jobs in the period. Of course, this uptick is well off the average of the prior three months of over 214,000 and is the weakest gain in twelve months. However, July was revised higher by 18,000 and August received a large upward revision to 270,000 from 201,000 in its initial tally, demonstrating the large variability in this indicator. Additionally, one of the most closely watched and quoted indicators, the unemployment rate, improved as well. Currently 3.7 percent, it reached its lowest level since 1969!
Private payroll gains hurt the tally. Firms increased their headcount by just 121,000 people, 133,000 fewer than in August. Two industries suffered big losses to their lists of employees; retail trade shed 20,000 jobs, while leisure and hospitality dropped 17,000.
Fortunately, wage gains continued, but the duration of an average workweek idled. Average hourly earnings increased 0.3 percent for the fourth time in five months. Year-over-year, hourly pay has grown 2.8 percent, down from 2.9 percent in August. The average workweek for all employees remained steady at 34.4 hours, while production and nonsupervisory employees’ average workweek was unchanged at 33.7 hours.
September’s employment situation raises a caution flag for what has been one of the most impressive indicators. So far, this is just one setback for this indicator. Typically, employment is considered a lagging indicator as firms tend to be slow reacting when the business cycle changes direction. If this presumption remains true, and this indicator deteriorates further, it does not bode well for the next several quarters. However, most economic evidence continues signaling that America’s current upward trajectory remains the path of least resistance.
