A stronger-than-expected jobs report Friday that featured an unemployment rate below 6 percent for the first time in more than six years eased concerns about a softening economy but highlighted moribund wage growth.
Employers added a robust 248,000 jobs in September, pushing the unemployment rate down two-tenths of a percentage point to 5.9 percent, the Labor Department said. That’s the lowest since June 2008.
The strong numbers followed a weak August, in which just 142,000 jobs were thought to have been added. The Bureau of Labor Statistics revised that number Friday to 180,000, and July’s preliminary number was revised up by 31,000 jobs to 243,000. The revisions suggest that the economy enjoyed more tail winds than initially thought.
“Job gains in October were robust, and upward revisions to previous months show that the job market is in full swing,” said Mark Zandi, the chief economist for forecaster Moody’s Analytics.
Factoring in the monthly variability, job growth is now closer to about 225,000 per month, he said.
“At this pace of job growth, the unemployed and underemployed are quickly being fully employed,” Zandi said. “Also encouraging is the breadth of the job gains across industries and across all pay scales. The increase in hours worked per week is a positive leading indicator for continued strong gains.”
The report wasn’t without concerns. Wage growth was flat in September, and for August, it was revised up just a tenth of a percentage point. Year-over-year wage growth slowed to 2 percent in September from 2.1 percent in August.
“Wage growth has remained stubbornly low despite the drop in the unemployment rate, suggesting that perhaps labor market conditions are indeed weaker than suggested by the headline unemployment rate,” noted Michelle Meyer, a senior economist with Bank of America Merrill Lynch.
One explanation, she offered in an investor note, is that many firms didn’t cut wages during the recession and thus may not feel the need to raise them now amid an improving labor market.
As the last jobs report before the November midterm elections, the timing was opportune for the Obama administration as it tries to talk up the improving economy.
President Barack Obama addressed the jobs report Friday at a visit to a manufacturing plant in Princeton, Ind., saying the U.S. is “on pace for the strongest job growth since the 1990s.” He said the U.S. has now put more people back to work than Europe, Japan and all other advanced economies combined.