Huge Miss: Economy Adds Just 142,000 Jobs in September

The Department of Labor reported Friday that the economy gained just 142,000 jobs in September.

The number was well below economists’ predictions of a 200,000 monthly gain.

Worse, the Department revised its initial estimate for job gains in July and August down by almost 60,000 jobs. It was another Summer Bummer for the labor market.

The disappointing September number, and the downward revisions in July and August, bring the average monthly job gains over the past three months down to just 167,000 jobs. This is below the number of jobs need to keep pace with growth of the labor force as American youths, new immigrants and migrants enter the job market.

The rate is also far below the 260,000 average monthly gain during 2014, even though the economy is officially in its sixth year of recovery after the 2007 housing crash.

The dramatic decline in job growth over the Summer months suggest the economy is teetering on the edge of a contraction.

Average hourly earnings edged down a penny for the month. The length average work week also declined, with a sharper fall in manufacturing hours. Businesses usually increase hours of workers to meet demand before they hire new workers. The drop in hours and wages indicates that there is little demand pressure to increase employment.

In addition, the labor-force-participation rate also edged lower to just 62.4%, the lowest level in well over 30 years. This rate means that just 62.4% of working-age adults are in the labor force, either employed or actively looking for work.

September’s disappointing jobs report puts further pressure on the Federal Reserve. The underlying economy is incredibly weak, even though interest rates have effectively been zero for the last 6 years. Any increase in the cost of capital may push the economy into recession.

Of course, a continuation of the period of “free money” has its own dangers. The pressure on other currencies and commodity prices is destabilizing emerging countries. The zero-interest rate regime is also inflating many financial assets into bubble-like territory.

Make no mistake, September’s jobs report is bad by almost every measurement. The often-lauded economic “recovery” looks set to end in a whimper, rather than a bang.