What’s Going On Here?
Data released on Friday showed that the US economy added 136,000 jobs in September. And while that was fewer than economists predicted, the country’s unemployment rate also fell to 3.5%: a 50-year low.
What Does This Mean?
Investors largely ignored the disappointing job additions – perhaps because the official estimates for job growth in previous months were simultaneously increased. And those that were added may be more permanent: only 1,000 September hires were due to preparations for next year’s US census, compared to 25,000 in August.
There wasn’t much change in the number of people available to work last month, but more of them found jobs – which helped lower the unemployment rate. More working people bodes well: they’ll receive salaries which they can spend on sustaining the US’s longest-ever period of economic expansion.
Why Should I Care?
For markets: Stuck in the middle.
Between Friday’s jobs data and the surprisingly weak US manufacturing and services industry survey results published last week, investors didn’t know whether they were coming or going: they sold off stocks early last week, only to buy them back by the time Saturday rolled around. Some had predicted a weaker US economy might lead its central bank to lower the country’s interest rates again this month, giving stock prices a boost – although solid job creation may now make that less likely.
The bigger picture: America, you’ll have to WeWork harder.
The hammer hasn’t fallen just yet, but future US jobs data will have to pedal uphill against announced job cuts from under-fire coworking space company WeWork. It’s shortly putting 2,000 employees – a quarter of its workforce – OutOfWork. Likewise Silicon Valley tech company HP: it’s flagged 9,000 job cuts (16% of its staff) to come over the next few years in order to reduce costs. And these companies aren’t alone: in September, US retailers shed employees for the eighth month in a row.
