CHRISTOPHER S. RUGABER, AP Economics Writer
WASHINGTON (AP) — U.S. employers cut back sharply on hiring in September and added fewer jobs in July and August than previously thought — a sour note for a labor market that had been steadily improving.
The economy added just 142,000 jobs last month, depressed by job cuts by manufacturers and oil drillers. The unemployment rate remained 5.1 percent, but only because many Americans have stopped looking for work and are no longer counted as unemployed. The proportion of adults either with a job or looking for one is at a 38-year low.
Friday’s tepid jobs report from the government suggested that the U.S. economy, which has been outshining others around the world, is weakening. Lackluster growth overseas has reduced exports of U.S. factory goods. China, the world’s second-largest economy after the United States, is slowing. Europe is struggling. Emerging economies from Brazil to Turkey are straining to grow at all.
“The weakness in the global economy is washing onto American shores, James Marple, senior economist at TD Bank, said in a note to clients.
The sluggish data sent stock prices tumbling. The Dow Jones industrial average, which had been up before the jobs report was released, was down about 200 points two hours later. The yield on the 10-year Treasury note dipped to 1.92 percent, its lowest level since April. Investors tend to buy bonds when they expect sluggish growth and low inflation.
The dollar has risen about 15 percent against overseas currencies in the past year, making U.S. goods costlier overseas and imports cheaper. Lower exports likely helped hold growth in the July-September quarter to a meager 1.5 percent annual rate, according to Michael Feroli, an economist at JPMorgan Chase. In addition, sharply lower oil prices have led U.S. drilling firms to lay off workers and slash spending on equipment.
The tepid pace of hiring complicates the picture for the Federal Reserve, which is considering whether to raise interest rates from record lows. Fed Chair Janet Yellen has said that the job market is nearly healed. But she has also said she wants to see further hiring and pay growth for reassurance that inflation is moving toward the Fed’s 2 percent target. Average hourly wages slipped a penny in September and have now risen just 2.2 percent in the past year.
“Every aspect of the September jobs report was disappointing,” said Michelle Girard, an economist at RBS Securities. It “strengthens the case that the Fed will be forced to stay on hold over the remainder of the year.”
The shrinking of the U.S. labor force — the number of people either working or looking for work — reflects in part the first wave of retirements of the vast baby boom generation. But it also signals that many Americans remain discouraged about their job prospects. Modest growth and steady, if unspectacular, hiring hasn’t encouraged more people to look for work.
Though the overall job market has lost some vigor, U.S. consumers are spending at a healthy pace and boosting job growth in sectors like retail and hotels and restaurants. But lackluster growth overseas has sharply reduced exports of factory goods.
So far this year, job gains have averaged 198,000 a month this year, a solid total, but below last year’s average of 260,000.
Last month, construction companies added 8,000 jobs and professional services, which includes accounting and architects, gained 31,000. Government added 24,000. But financial services reported no gain. And hiring in education and health fell to its lowest level in nearly a year.
Copyright 2015 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.
Tagged with tED