The U.S. unemployment rate now stands at 5.9% - the lowest in five years - following a stronger-than-expected September jobs report. Employers added 248,000 positions last month, a number that easily exceeded consensus forecasts and provided greater optimism about a sustained economic recovery. The Bureau of Labor Statistics, which released the report, also revised upward job gains in August and July by a total of 69,000 positions.
The business services sector - a category that includes engineers, accountants and architects - had the strongest September for hiring, adding 81,000 jobs. Retailers contributed 35,000 positions, while the health care market provided 23,000 and the construction field brought on 16,000 new workers. Other areas, including the closely-watched manufacturing sector, were basically flat. Overall, the economy added 671,000 full-time positions, while part-time jobs declined by 384,000.
U.S. payrolls have now expanded by an average of 227,000 positions per month in 2014, a period of job growth in line to be the best in 25 years. Still, while more jobs are being created, the labor-force participation rate – a measure of Americans who are working or want to work – fell in September to 62.7%, the lowest mark in three decades. Job participation among Americans between the ages of 25 and 54 is historically low, a noted concern of the Federal Reserve as it prepares to fully unwind its QE3 bond-buying program this month. About 9.3 million Americans remain unemployed, with 3 million out of work for longer than six months.
Wage growth is also a lingering economic concern, as average hourly pay among private sector workers fell one cent in September to $24.53. In an economy considered healthy by economists, wages usually rise between 3.5% and 4% annually. In an effort to spur the economy through more borrowing and spending, the Fed has kept its benchmark interest rate near zero for almost six years. When the rate increases, which is likely to happen next year, some analysts worry hiring and any wage growth may slow, at least temporarily.
In the meantime, after the September jobs report was released, many banks and economists upgraded their Q3 GDP forecasts. Most estimates now fall at around 3.5% growth, which would follow a strong 4.6% official GDP gain in the second quarter.