The nation’s unemployment rate slipped below 6% for the
first time since the recession as hiring returned to a strong pace, lifting
hopes for an economy that continues to show sluggish wage growth and persistent
underemployment.
Employers added 248,000 jobs in September, rebounding from a
weak August, the Labor Department said Friday. Payrolls have expanded an
average 227,000 a month this year, putting 2014 on track to be the strongest
year of job growth since the late 1990s.
The jobless rate fell two-tenths of a percentage point to
5.9%, the lowest level since July 2008, continuing a slide that partly reflects
a shrunken labor force. Unemployment, nearly five years after surging to 10% in
the wake of the recession, is moving closer to the 5.2%-5.5% range the Federal
Reserve expects to see in the long run.
The robust jobs number, along with news of the unemployment
rate falling below 6%, propelled stocks higher. The Dow Jones Industrial
Average rose 208.64 points, or 1.2%, to 17009.69, ending four days of declines.
The dollar soared against major currencies.
The upbeat report was tempered by weak earnings growth and
continued high underemployment, reflecting workers stuck in part-time jobs.
But it still heightened prospects the Fed would move sooner
than expected—perhaps in early 2015—to raise short-term interest rates.
Central-bank policy makers, set to meet again in late October, have kept the
Fed’s rate target near zero since the recession to fuel the recovery. Fed
Chairwoman Janet Yellen has said the bank
could move up its timetable for raising rates if growth continues to exceed
expectations.
The labor-force participation rate—reflecting the share of
working-age Americans who have a job or are looking for one—fell last month to
a three-decade low of 62.7%. Before the recession it stood at 66%. Only part of
the decline is due to aging baby boomers; even among Americans in the prime
working ages of 25 to 54, participation is historically low.
And workers’ wages still have yet to climb significantly.
Among private-sector workers, average hourly earnings actually fell a penny
last month, to $24.53. They have risen 2% over the past year. This is the
second expansion in a row including the recovery after the 2001 recession,
where economic growth hasn’t translated into rising incomes for most Americans.
While the economy is in the middle of a pickup, weak
productivity growth and the downsized labor force point to limited gains in
overall growth in the long term. Some economic developments point to a
potential shift ahead. Increased hiring this year has accompanied a pickup in
spending by firms on facilities and big-ticket equipment. Economists say such
moves show companies are becoming more bullish and are ready to expand over the
long term. An increase in job openings coupled with lower unemployment could
force firms to raise wages as they compete for a smaller share of workers.
Last month’s job growth was broad-based, with professional
and businesses services such as accounting and engineering leading the way,
followed by construction, retail and health care. Manufacturing was largely
flat for the second straight month. The average workweek climbed to 34.6
hours—the highest since the recession and a sign companies may need to step up
hiring to meet stronger demand.
Despite the latest progress, 9.3 million workers are still
searching for work, almost a third of them unemployed for six months or more. A
broader unemployment measure including part-time workers who can’t find
full-time jobs and those too discouraged to apply for work stood at 11.8% in
September.
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