The cavalcade of payroll gains continued for the 108th month in September, pushing down the jobless rate to a half-century low and countering anxieties that had been piqued by slowing global growth, declining factory orders and a jittery stock market.
Employers kept hiring at a steady if unremarkable pace, adding 136,000 jobs, the Labor Department reported on Friday. And the unemployment rate fell to 3.5 percent.
The report capped a week of otherwise disappointing economic news. Manufacturing activity in the United States fell for the second month in a row, while the World Trade Organization predicted that the growth in global trade would slacken significantly. A key measure of activity in the services sector — which accounts for two-thirds of the country’s output — also cooled.
“It’s great news to hit a record low on unemployment,” Diane Swonk, chief economist at Grant Thornton, said. The tightening labor market, though, failed to lift wages; the 12-month growth rate fell to 2.9 percent, from 3.2 percent in August.
Clearly, the economy’s employment engine has lost some of its spark. Last year, an average of 223,000 jobs were created each month, thanks in part to the temporary pick-me-up delivered by tax cuts and increased government spending. The average for the first nine months of this year is 161,000.
That falloff alone is not cause for alarm. A decline was expected now that the recovery has passed its 10-year anniversary, and there are more job postings than job seekers. The unemployment rate has been skimming along the baseboards. The jobless rates for Hispanics and for workers without a high-school diploma were the lowest on record. And many Americans who had dropped out of the labor force because they were too discouraged to look for work or couldn’t find sufficiently attractive offers, have now rejoined.
President Trump celebrated the report, while taking a swipe at critics who want Congress to impeach him.
Still, the government’s monthly roundup contained enough conflicting data that optimists and pessimists around the country and in Washington could find evidence to support their outlook.
Federal Reserve policymakers will be parsing its contents before their scheduled meeting at the end of October.
Central bank officials have been split about the need for a third cut in their benchmark interest rate. On Friday, Jerome H. Powell, the Fed chair, said, “While not everyone fully shares economic opportunities and the economy faces some risks, overall it is — as I like to say — in a good place.” He added: “Our job is to keep it there as long as possible.”
On Wall Street, expectations that the Fed would pare borrowing costs have been building this week as news about slowing growth rolled in.
[Analysis from The Upshot: Jobs numbers have something for everyone.]
Carl Tannenbaum, chief economist at Northern Trust, described the latest report as reassuring. “All of us have been on edge a little bit with declines on readings in the service sector, fearing that the trade problems would jump the fence from heavy to lighter industries,” he said.
Friday’s report revised job figures for July and August, adding 45,000 to the totals. “We’re on a three-month track of over 150,000 jobs per month, and that says to me that the economy is still expanding well,” Mr. Tannenbaum said.
The report helped buoy investors, after the S&P 500 had fallen more than 2 percent in the first three days of October. The index was up 1.4 percent Friday afternoon.
Torsten Slok, chief economist at Deutsche Bank Securities, was unconvinced that the clipped pace of hiring was the natural byproduct of an economy at full capacity. “The problem with that story is that wage growth dropped quite significantly,” he said. “Trade uncertainty is why we’re seeing a jobs slowdown and why the wage numbers are slowing.”
Mr. Trump set off another retaliatory volley in his trade war last month when he increased tariffs on consumer goods from China and threatened to extend the import tax to even more products.
When Mr. Slok saw that new export orders had declined recently, he said: “I almost fell out of my chair. That can only be driven by trade.”
“The economy is still doing O.K.,” he said. “But the uncertainty from the trade war continues to be a cloud. Manufacturing is certainly is trouble.”
Mr. Trump has repeatedly placed manufacturing at the center of his economic strategy. Nonetheless, that sector is suffering the most from prolonged trade tensions. Companies in the business of making goods — as opposed to those that deliver services like hospitals and restaurants — are much more dependent on sales to other countries and supply chains that wend around the globe.
Last spring, manufacturers were adding as many as 25,000 jobs a month. In recent months, the average trickled to a few thousand, and in September, the sector lost 2,000 jobs. (The United Auto Workers’ strike against General Motors began after the government completed its survey of employers and is not reflected in this report.)
But Becky Frankiewicz, president of ManpowerGroup North America, a staffing firm, is not convinced that trade friction is responsible for the drop.
“The number of manufacturing jobs we have open outpaces the number of candidates,” she said. “It’s become more difficult to fill a job in the last four months.”
Banner Metals, a tool-and-die maker in Columbus, Ohio, plans to add three people to its 40-person staff next year. “Our business has not slowed down in any way,” said Bronson Jones, the chief executive and a part owner. “We’re actually growing.”
Applicants talked to recruiters last month at a job fair in Miami for people 50 or older. Monthly hiring has slowed this year, but the labor market remains tight.CreditLynne Sladky/Associated Press
The health and education sectors remain the economy’s most potent job creators.
Before this month’s stall, wage growth over all had been picking up, putting more money in consumers’ pockets. As long as Americans continue to spend, the economy will keep humming.
But economic confidence can be fickle. Worries about tariffs and the general direction of the economy are spooking those outside the manufacturing sector, according to the Institute for Supply Management, which conducted the survey of service businesses.
The dissonant economic cues are pulling some employers in different directions.
“What I’m hearing is different from what I’m seeing,” said Tom Gimbel, chief executive of LaSalle Network, a staffing firm in Chicago. With so much uncertainty, some chief executives say they are afraid of having too much capital invested in their business.
“But what I’m seeing is that people are still hiring,” he said. His firm’s revenue, he said, is up 15 percent from last year, and placements are up 8 percent.
Hiring in professional and business services has kept pumping jobs into the economy at a steady rate, averaging 35,000 a month since the start of the year.
The global accounting firm EY, formerly Ernst & Young, plans to hire 15,000 workers by the end of June, said Dan Black, global recruiting leader. “There’s a lot of signals of a slowdown,” he said, “but we continue to be very bullish on hiring here.”
“No matter what the economy is doing,” he added, “you still need your taxes done, and you still need your books audited.”
The retail trade sector, by contrast, continued to contract, losing 11,000 jobs.
The government’s monthly estimates, which are based on two separate surveys, one of households and the other of employers, will be revised twice more.
The president’s trade strategy has support from some sectors that embrace his get-tough approach — even if they are suffering from the fallout. But several industries and small businesses are worried.
Adam Briggs, vice president for sales and marketing for Trans-Matic, a precision metal stamper in Holland, Mich., said the family-owned firm is feeling the strains of the tariffs and a slowing economy. The company has had to raise prices because the cost of raw materials not available in the United States has gone up, Mr. Briggs said. At least one of his clients left to look for a supplier in Europe.
“We’re struggling, but our customers are struggling with it too,” he said.
Last year, the company employed more than 300 people in Holland. That number is down to 275, through a combination of attrition and voluntary separations, Mr. Briggs said.
Unpredictability disquiets business managers and markets. “Anything that relates to uncertainty is not good for business and household spending, said Ellen Zentner, chief United States economist at Morgan Stanley. And trade tensions — as well as the political turmoil surrounding Mr. Trump as congressional Democrats pursue an impeachment inquiry — fuel uncertainty, she said.
Politics is something that Chris Murphy, managing director of ThoughtWorks, a global software and digital transformation consultancy, rarely talks about with clients. The one exception? “The uncertainty created across industries by the trade war in China,” he said. “People are keen to see it resolved and go away sooner rather than later.”
Matt Phillips and Jeanna Smialek contributed reporting.
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