WASHINGTON–Job growth in the lead-up to the government shutdown exceeded the expectations of many economists, with the Labor Department reporting payrolls rose by a seasonally adjusted 119,000 during September, the strongest gain since April.
Many forecasters had predicted the number would come in around 50,000.
The government did report, however, that payroll numbers of August were revised to a loss of 4,000 jobs, and that July’s payrolls have been slightly lower to a 72,000 gain. That result is that employment in July and August combined was 33,000 lower than previously reported.
The unemployment rate, which is based on a separate survey from the jobs figures, rose slightly to 4.4% as nearly half a million people joined the labor force, the federal data showed.
The government shutdown has complicated the reporting of some data, with the Labor Department saying it will not be able to release unemployment numbers for October, as it was unable to collect the necessary data.
CU Economist: A ‘Mixed Bag’
“The September jobs data was a mixed bag that does not provide any clarity for the FOMC’s December rate decision. Job growth beat expectations, but the pattern of downward revisions to prior months continued,” said Curt Long, chief economist with America’s Credit Unions. “Meanwhile, the unemployment rate ticked up to 4.4 percent and seems poised to reach or surpass the FOMC’s year-end forecast of 4.5 percent. That was enough for the committee to pencil in another rate cut, but more recently the hawks have begun to dig their heels in. There is still a case for cutting, but it likely is not strong enough to move a sufficient portion of the committee. As high rates weigh on consumer sentiment, loan demand, and overall spending, the low borrowing rates served up by credit unions are helping to keep the economy and consumers afloat.
“During the government shutdown, credit unions demonstrated the critical role they play in supporting their members through financial turbulence,” Long continued. “With strong capital and abundant reserves, they are well positioned to do so again should the labor market weaken.”
Data to be Too Late for Fed Meeting
The government said it will release data from a separate survey on the number of jobs created or lost in October with the November payrolls report on Dec. 16. That’s a week after the Federal Reserve holds its next monetary policy meeting, scheduled for Dec. 9-10. Markets have been pricing in a rate cut at the December meeting, but in recent weeks members of the Fed board and some economists have cautioned a rate reduction is no sure thing, as inflation remains higher than the Fed’s target of 2% annually.
‘Strongly Differing Views’
Minutes from the Fed’s most recent meeting, released Wednesday, show, “Participants expressed strongly differing views about what policy decision would most likely be appropriate at the committee’s December meeting…Available indicators were consistent with a continued gradual cooling in the labor market without any evidence of a sharp deterioration.”
The Labor Department and the White House have also signaled that a Consumer Price Index report for October is unlikely.
