- Job growth accelerated to 266,000; strongest since January
- Return of 44,000 striking auto workers boosted manufacturing employment
- Unemployment rate edged back down to 3.5%
There was a lot to like in today’s employment report: a strong rebound in job growth (even netting out the return of workers on strike), upward revisions to earlier months, a lower unemployment rate, and still-solid (though not accelerating) wage growth. A key question for the US economy this year has been whether a slowdown in industrial production and business investment (related to rising trade tensions and a softer global outlook) would spill over into other sectors and drive a broader slowdown in growth. Once again the jobs numbers suggest limited evidence of that dynamic. Yes, employment growth slowed across many industries this year, but low jobless claims and still-elevated vacancies suggest lack of labour supply is a big part of the story. Overall job gains have remained strong enough to push the unemployment rate to new, multi-decade lows.
Solid growth in the household sector, spurred on by the Fed’s rate cuts, has provided a nice buffer against external headwinds and trade uncertainty. And we’re seeing early evidence that business investment, which was a drag on growth in recent quarters, may be bottoming out in Q4. All of this suggests the Fed is done with its mid-cycle adjustment, barring an unexpected materialization of downside risks. Expect a steady rate decision next Wednesday, and more of the same in 2020.
