This morning brought pleasantly surprising news from the labor market: In September, the unemployment rate dropped to 7.8%, down from 8.1%. Economists had expected unemployment to tick up to 8.2%. This just so happens to be the lowest level since January 2009—when President Obama took office, so this will undoubtedly become a talking point on the campaign trail. The drop was driven by a surge in its household payroll survey, which reported that 873,000 more people found work in September compared with August.
The Labor Department also released the results of its separate payroll survey, which surveys 375,000 businesses and is considered a more stable measure of jobs growth (but it doesn’t include temporary workers and the self-employed like the household survey). According to this report, September brought an 114,000 increase in payrolls. But the really good news from this report was that August’s payrolls were revised up 48% to 142,000 and July’s payrolls were upwardly revised by 28% to 181,000.
Meanwhile, hourly earnings advanced 0.3%—higher than expectations, and the average workweek rose to 34.5 hours. Both of these metrics are important because they are an indication of how productive the labor force is as well as how much individual employees are bringing in. The more that American workers bring home, the more disposable income they have to drive consumption—which, as many of us know, accounts for two-thirds of economic growth.
This news was enough to keep the indices steady from yesterday’s levels—including close to a five-year high for the S&P 500.
Looking ahead, future payroll reports should get a boost from retailers hiring more seasonal workers for the holiday shopping season:
- Wal-Mart Stores Inc. (WMT) is adding 50,000 seasonal employees, more than last year.
- Kohl’s Corp. (KSS) expects to hire more than 50,000 workers, a 10% increase over last year.
- Toys “R” Us Inc. is looking to hire 45,000 temp workers, 12.5% more than last year.
- Macy’s Inc. (M) will extend offers to 80,000 seasonal workers—a jump of 3% over last year.
- Target Corp. (TGT) will add between 80,000 to 90,000 employees for the holidays—this is slightly less than last year, but still represents a significant opportunity for those looking for work in retail.
And every one of these 300,000+ employees will be put to work, as analysts expect that holiday sales will advance 4.1% over last year, to $586.1 billion. And consider this—this rate tops the 10-year holiday sales growth average of 3.5%. So as I mentioned yesterday, the American consumer appears to be a primary catalyst for economic—and jobs—growth.
Have a great weekend–I’ll be out on Monday for Columbus Day, but I’ll check in bright and early this Tuesday!