Government data out Friday showed that hiring cooled but held up at a solid pace in September, offering a snapshot of the American economy during a period marked by heightened uncertainty and concerns about a potential slowdown.
The Bureau of Labor Statistics said the US added 136,000 nonfarm payrolls last month, fewer than the 168,000 created in August but enough to push unemployment levels to fresh lows, at 3.5%. Analysts had forecast an increase of 147,000 jobs.
Average hourly earnings increased by 2.9% from a year earlier, the slowest pace since July 2018, which could bolster expectations for the Federal Reserve to lower borrowing costs this month.
“While the correlation between wages and inflation isn’t particularly strong, tepid wage growth will still reduce concerns that a tight labor market will suddenly push prices higher,” said Eric Winograd, the senior US economist at AllianceBernstein. “It removes one potential impediment to Fed rate cuts.”
Trade tensions have added pressure to a labor market that was already expected to slow this year as the effects of tax cuts and other stimulus measures began to fade. From July to September, 157,000 jobs were created each month on average.
“Economic growth, and therefore job creation, are showing clear signs of slowing,” said Cailin Birch, a global economist at the Economist Intelligence Unit. “The core issue behind this is trade policy uncertainty, and the negative impact this has already had on some key export markets for US firms, including the EU and China.”
The effects of tariffs levied between the US and major trading partners have grown increasingly evident in recent weeks, fueling broader concerns about the economy.
On Tuesday, data showed that the manufacturing sector fell deeper into a recession in September as new orders and hiring cooled further. American factories lost 2,000 jobs last month, the BLS report said.
“The uncertainty linked to the direction of trade policy may exact a larger price on hiring across goods producing and manufacturing jobs,” said Joe Brusuelas, the chief economist at RSM, a financial-consulting firm.
The Trump administration plans to expand tariffs to thousands of consumer products from China and the European Union in the coming months, which would put businesses and households more directly at risk.
Separate data released Thursday suggested that higher costs and uncertainty have started to weigh on the service sector, which accounts for most of the activity in the economy. Retail trade lost 11,000 jobs in September and has shed 197,000 positions since a peak in January 2017.
The labor market struggled to pull Americans from the sidelines last month. The labor-force participation rate held steady at 63.2%, a figure that is low by historical standards and compared with other countries.
President Donald Trump seized on the employment report on Friday, suggesting that the 108th month of job gains could undermine impeachment proceedings against him. House Speaker Nancy Pelosi launched the inquiry last week after a whistleblower complaint said Trump pressured Ukraine to investigate a 2020 campaign rival.
“Breaking News: Unemployment Rate, at 3.5%, drops to a 50 YEAR LOW,” the president wrote on Twitter. “Wow America, lets impeach your President (even though he did nothing wrong!).”