A lackluster jobs report released by the U.S. Bureau of Labor Statistics (BLS) in early October has shaken the confidence of some in the overall health of the American economy. The news prompted some nervous investors to sell off stocks while others questioned the economy’s ability to withstand the hit should the Federal Reserve decide to alter its near-zero percent interest rate policy by year’s end.
The September report showed sluggish growth in nonfarm payroll with only 142,000 jobs added during the month. The slow growth followed August numbers that were revised dramatically from 173,000 to only 136,000 jobs gained that month, the BLS reported. July’s numbers also saw a downward revision from 245,000 to 223,000. Not surprisingly, the unemployment rate changed little in September with a 5.1% rate reported. The number of unemployed persons is now estimated at 7.9 million.
Investors fear the weak numbers don’t bode well for America’s economic strength. Some worry that the sluggish employment gains might be indicating that the Chinese-led global slowdown is taking its toll on country’s economic health. The numbers prompted a sell off of U.S. stocks while the dollar saw its strength weaken as well. The yields for U.S. government bonds also fell.
Investors are betting the less-than-stellar numbers have decreased the chance the Fed will increase interest rates in December. In fact, bets on interest rate futures showed only a 30% chance of the hike coming to fruition. This was down from just under a 50% chance just prior to the release of September numbers.
The global slowdown is also being felt in America’s manufacturing circles. U.S. factories dropped some 9,000 positions in September, following a reduction of 18,000 jobs in August, the labor department reported. Overall, orders received by American factories were down by about 1.7% in August, the U.S. Commerce Department noted in a separate report.
While the news overall wasn’t encouraging, some segments of the economy witnessed growth in September. Employment in the healthcare sector was up by 34,000 jobs, holding steady with average monthly gains over the past year. Information positions also increased by 12,000 jobs in September to account for 44,000 over the course of the year.
Despite a few bright spots, analysts are less than thrilled with the numbers.
The Fed’s next meeting is set to take place in late October. Futures prices indicate a hike in rates likely won’t come at that meeting, but they might in March 2016.