September Jobs Report: Party Like It's 1969?

Every month, the Department of Labor releases data pertaining to the unemployment rate, wage rates and the overall status of the economy.

Despite poor headline numbers, TD Ameritrade chief market strategist JJ Kinahan said the economy is showing innate strength.

“What [the report] does confirm is that the economy is still pretty hot," he said of the data released Friday.

"Even though the headline numbers for the report were bad, it confirmed we’re still in a great place in the economy; not having the number come in high was a good thing."

Unemployment

The unemployment rate has dropped to 3.7 percent, the lowest since 1969. Over the year, the number of unemployed persons declined by 0.5 percentage points to 795,000.

Bankrate.com’s senior economic analyst Mark Hamrick said the trend is likely to continue.

“There’s no reason to believe the strength in the U.S. economy that we’ve seen for many months now should be interrupted in the near term. We’re 10 years out of the financial crisis and the Great Recession, and we’ve come a long way since then — but there are still some echoes that reverberate through the economy.”

In September, the labor force participation rate remained at 62.7 percent, while the employment-population ratio was 60.4 percent.

Data By Sector

Health care employment rose by 26,000. Hospitals added 12,000 jobs, while employment in ambulatory health care services continued to trend up. Over the year, health care employment has increased by 302,000, the report said.

Employment in manufacturing has increased by over 200,000 jobs, despite rising threats from tariffs and trade disputes.

“I still would expect a strong earnings season," said TD Ameritrade's Kinahan.

"Last quarter, the worries were high energy prices and a high dollar. We’ll see if those are still the theme, or if we see the tariff theme."

If tariffs are a more prominent concern, it could "rattle the markets" somewhat, the strategist said.

"What the CEO’s say on their calls — whether it's about tariffs or not — are the things that will be the headwinds going forward.”

Employment showed little or no change in major industries such as retail, despite the continued e-commerce threat.

Brick-and-mortar retail should remain strong, said Bankrate's Hamrick.

“I think all of those can coincide. We have become a society that is more invested in experiences than having the latest apparel fashion. You can see it in the way that people live their lives; people will wear what looks like something they would wear to the gym on the weekends.”

Inflation rate data will be available soon, in time for the midterm elections in November.

Wage Rates

Wage growth not only failed to reach 3 percent, but actually fell back a bit to 2.8 percent.

The Fed could raise interest rates higher than expected, Hamrick said. 

“In many ways, the Fed has been cheering for a higher rate of inflation, so let’s see what happens in the coming months," he said. "I don’t think higher inflation is a given by any stretch. It just hasn’t shown up, and If we can continue to keep the unemployment rate even below 4 percent for a sustained period, we should see further increases in wages.”

Amazon.com, Inc. AMZN’s has moved to raise the base pay for all employees to $15.

For the larger economy, the average wage increase over the year to 2.8 percent in September, which was in-line on a year-over-year basis.

Related Links:

Jobs Report Blows Expectations Out Of The Water

The Growing Divide Between Inflation And Home Value

Woodstock photo by Derek Redmond via Wikimedia.