After great August, September jobs report misses the mark

Unemployment reversed course, increasing again, and the shine from last month’s blockbuster report dimmed from downward revisions.MANHATTAN (CN) — The U.S. economy added only 29,000 jobs last month, well short of the 84,000 most economists had forecast and a far cry from the 162,000 jobs recorded in August’s jobs report.Unemployment ticked up slightly for the first time since January, from 4.1% in August to 4.2% last month, despite recent weekly unemployment claims remaining under the 200,000 mark.Fortunately, revisions were not terrible, with July’s already lackluster employment report losing only 10,000 of its initially reported 31,000 claims and last month’s report dropping by 29,000 jobs.Analysts weren’t too rattled by Friday’s report, noting job growth is still considered in line with the breakeven pace. “Looking ahead, we expect the unemployment rate to hold steady around 4.2% with the risk skewed to the downside as labor force growth continues to slow,” economist Nancy Vanden Houten at Oxford Economics wrote in an investor’s note.Healthcare, which has led other sectors in jobs reports recently, added only 17,000 jobs in September, about half its average monthly gain over the past year. Manufacturing also ticked up but by only 9,000 positions.Conversely, the private sector jobs report earlier this week surprised to the upside, with payroll company ADP noting a 90,000-job increase, the first acceleration in job gains seen in three months. With the latest report, the three-month average hit 57,000 jobs, which many experts is close to the breakeven pace of monthly employment growth.Wage growth among those leaving their jobs and those changing their jobs remained essentially unchanged, with 3% increase for the former and 4.8% for the latter.“It’s a strong report,” Nela Richardson, ADP’s chief economist, said in a statement. “After a three-month slowdown, job creation rebounded and pay growth remained solid.”Most sectors saw employment increases, with education and healthcare leading the pack with a 55,000-job increase. Only the financial and professional services sectors saw a drop, losing a combined 27,000 jobs.All companies, from those with fewer than 20 employees to those with more than 500, boosted their worker pools. However, Matthew Martin, senior U.S. economist at Oxford Economics, noted smaller firms have accounted for more than half of all job gains since 2005.Martin noted that smaller firms “have smaller buffers to deal with big swings in costs from factors like energy price shocks” and that if borrowing costs increase much more “they may be forced to cut back on hiring, which could slow the job market.”Other indications suggest the labor pool may be shrinking. Earlier in the week, the monthly job openings and labor turnover report from the Bureau of Labor Statistics showed 7.1 million job openings, slightly fewer than expected. The number of employees quitting their jobs also remained relatively unchanged.Hiring activity has slowed, too, if the most recent report from the National Federation of Independent Business is to be trusted. The report showed 32% small business owners reported job openings they could not fill, eight points higher than the survey’s historical average.“Overall employment conditions are softening, though the small business labor market is still tighter than normal,” NFIB Chief Economist Bill Dunkelberg said in a statement, adding that “employees are proceeding more cautiously as they look to make hiring decisions.”Subscribe to our free newslettersOur weekly newsletter Closing Arguments offers the latest about ongoing trials, major litigation and rulings in courthouses around the U.S. and the world, while the monthly Under the Lights dishes the legal dirt from Hollywood, sports, Big Tech and the arts.Additional Reads