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Tepid September Jobs Report May Be Just What Markets Desire


From NPR News, this is ALL THINGS CONSIDERED. I'm Audie Cornish.


And I'm Melissa Block.

After a 16-day delay, the employment report for September was finally released today. The most anticipated report of the month was knocked off schedule by the government shutdown. And as NPR's John Ydstie reports, when it arrived this morning, it didn't quite live up to expectations.

JOHN YDSTIE, BYLINE: Economists had anticipated that about 180,000 new jobs were added to payrolls in September. That's close to the average for the past 12 months. But the long awaited data fell short. Just 148,000 new jobs were created in September. Millian Mulraine, an economist with TD Securities, blamed the hiring slowdown on the growing uncertainty about a government shutdown and debt default back in mid-September when the data was collected.

MILLIAN MULRAINE: And going into the possibility of a government shutdown, I think you, as a business owner, will be reluctant in engage in hiring or investment decision. I think that's what's being reflected here.

YDSTIE: Mulraine says the weaker-than-expected hiring represents a slowing momentum in the labor market largely due to the uncertainty created by the Washington stand-off. But Jim O'Sullivan, chief U.S. economist at High Frequency Economics, isn't so sure. He says the 148,000 jobs created is a pretty good number, especially when you consider that over the past year, the first estimate of monthly job growth has later been revised upward by about 25,000 jobs, on average. And he points out, today's drop in the unemployment rate to 7.2 percent continues the downward trend in that important measure.

JIM O'SULLIVAN: You know, every month people are inclined to dismiss it, while, say, A, the economy is not that strong, that it's being overstated by the weakness in the participation rate, that people are dropping out and undoubtedly that's been part of the story over the last couple of years is that the unemployment rate has come from a high of 10 percent down to 7.2 percent now.

YDSTIE: But O'Sullivan says, it's not just a statistical illusion. He says the fall in the unemployment rate is an indication of legitimate improvement in the job market. O'Sullivan acknowledges, though, that there's a question about the relevance of this employment report which reflects the situation before the government shutdown. Jason Furman, who recently took over as chairman of the White House Council of Economic Advisers, agrees.

JASON FURMAN: It's really about a month ago that these jobs numbers are for and a lot has happened in economic policy since then. And so, what we're most interested in is where do things stand, you know, right now.

YDSTIE: And Furman says all indications are that the economy was negatively affected by the shutdown.

FURMAN: There's no question that the economy suffered a real hit in the first half of October.

YDSTIE: In fact, the shutdown is likely to subtract 120,000 jobs from the job employment report for October, says Furman. While the job market has made steady progress in the past three years, Furman says it still needs improvement, and Washington has to stop erecting obstacles and find things both parties can agree on to boost job growth.

FURMAN: Whether it's investing in infrastructure, investing in education, reforming our business tax code, bring our deficit down over the medium- to long-term, you know, there's an awful lot of things we should be able to agree on that would actually help the economy.

YDSTIE: While job growth was weaker than expected in September, today's report appeared to hit a sweet spot for the financial markets which rallied today. That's because it didn't show the economy tanking a month ago amid uncertainty over the threat of default and a government shutdown. But at the same time, says Millian Mulraine, the report showed enough weakness to suggest the Fed won't pull back its stimulus.

MULRAINE: This report suggests that the economy is not necessarily in any shape to handle a slowdown in the pace of monetary stimulus.

YDSTIE: That was the conclusion also reached by lots of other economists. Many of them are now predicting that the Fed won't start dialing back its $85 billion a month in monetary stimulus until March of next year. John Ydstie, NPR News, Washington. Transcript provided by NPR, Copyright NPR.

John Ydstie has covered the economy, Wall Street, and the Federal Reserve at NPR for nearly three decades. Over the years, NPR has also employed Ydstie's reporting skills to cover major stories like the aftermath of Sept. 11, Hurricane Katrina, the Jack Abramoff lobbying scandal, and the implementation of the Affordable Care Act. He was a lead reporter in NPR's coverage of the global financial crisis and the Great Recession, as well as the network's coverage of President Trump's economic policies. Ydstie has also been a guest host on the NPR news programs Morning Edition, All Things Considered, and Weekend Edition. Ydstie stepped back from full-time reporting in late 2018, but plans to continue to contribute to NPR through part-time assignments and work on special projects.
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