The U.S. economy added 136,000 jobs in September and the unemployment rate dropped to 3.5% – the lowest it’s been since December 1969 – according to the U.S. Bureau of Labor Statistics.
The number of unemployed persons decreased by 275,000 to 5.8 million.
Job gains were most pronounced in health care and in professional and business services, the report shows.
The labor force participation rate was flat at 63.2% and the employment-population ratio ticked up to 61%.
Average hourly earnings were flat on a month-over-month basis but were up 2.9% year-over-year.
“Today’s report signaled good news for the economy, labor force and consumer buying power,” says Odeta Kushi, deputy chief economist for First American, in a statement. “The unemployment rate fell to a five-decade low, while job growth remained steady, gaining 136,000 jobs in September.”
What this means is stronger purchasing power for home buyers.
“Wage growth for all production and non-supervisory employees on private non-farm payrolls, a primary driver of household income growth and house-buying power, remained strong with a 3.5 percent increase compared with a year ago,” Kushi says. “Add that to low mortgage rates and it’s a good boost for house hunters.”
Kushi further adds that ”much of U.S. economic growth is driven by consumer spending, and people are expected to keep spending given that jobs are plentiful and wages are rising.”
“The housing market, by many metrics, had one of its best months in August 2019, as it was buoyed by lower mortgage rates, favorable demographics, and the continued growth in wages, which contributes to higher household income and stronger purchasing power,” she says.
Kushi points out that the prime-age labor force participation rate, one of the primary indicators for the health of the labor market, is up 0.8 percentage points compared to one year ago.
“This means more jobs and wage growth may be on the way, and is another positive sign for the health of the overall economy,” she says.
However, the prime-age labor force participation rate remains low. This “must continue to rise for wage growth to continue its upward trend,” she says.
“While the prime-age labor force participation rate remains below the 2007 level and the long-run trend, if we see continued growth to 83 percent, it could push wage growth for all production and nonsupervisory employees on private non-farm payrolls to as high as 3.8 percent.”