Disturbing Trend Found in Friday’s Employment Numbers

Friday’s Employment NumbersThis past Friday, the Bureau of Labor Statistics reported only 142,000 jobs were added to the U.S. economy in September. And August’s figure was revised lower from 173,000 previously reported jobs created to an actual number of only 136,000 jobs. (Source: Bureau of Labor Statistics, October 2, 2015.) Overall, September’s jobs market report was terrible.

I see a disturbing trend developing when it comes to the number of jobs added to the U.S. economy. Since late spring, fewer and fewer jobs have been created. In the table below, I list how many jobs were added to the U.S. economy each month since May.

U.S. Jobs Created from May to September 2015

Month Jobs Added
May 260,000
June 245,000
July 223,000
August 136,000
September 142,000

Data source: U.S. Bureau of Labor Statistics

In the matter of a few months, the rate of jobs added to the U.S. economy has dropped 45%—from 260,000 jobs created in May to just 142,000 in September.

The unemployment rate, which includes people who have given up looking for work and those who have part-time jobs because they can’t find full-time jobs, remains above 10%. It’s been above this level since the recession.

Job Creation Remains Dismal; Workers Fleeing Jobs Market

Fewer jobs created is just one of many concerns with the U.S. economy. The type of jobs added to the U.S. labor market remains questionable. September was another month when we saw more retail jobs being created than high-wage-paying jobs.

In September, 21,000 jobs were added in the food services and drinking sector, and 24,000 jobs were added to the retail trade sector. Manufacturing lost 9,000 jobs. Other high-wage-paying sectors like construction, wholesale trade, transportation, warehousing, and financial activities saw very little or no job growth at all.

And we continue to see the labor force participation rate decline. This rate shows to what extent Americans have stopped looking for work. Please look at this chart.

FRED Chart US Recessions

Source: Federal Reserve Bank of St. Louis, last accessed October 2, 2015

The labor force participation rate—that’s the percentage of people in the workforce in the U.S. economy—stands at the lowest level since the late 1970s!

Poor Jobs Market Report Beckons Another Round of Quantitative Easing?

Long-term readers of Profit Confidential know I have been skeptical about the U.S. jobs market for a very long time. When I look at September’s jobs market report, I see more reason for the Federal Reserve to abandon its talk about an interest rate hike and start taking about another round of quantitative easing.

Don’t get me wrong; I believe today’s low interest rate environment is actually doing more harm than good to the U.S. economy. We should have raised rates long ago. And I’ve yet to see data that shows money printing (by any country) actually helps an economy. But as the Fed often says in its forecasts, things are subject to change based on economic data as it’s released. From what I have seen, the way the Fed looks at data, a couple more monthly reports of poor jobs growth and higher interest rates will be off the table and QE4 will be on the table.