Rolling on

Broad US jobs trends withstand weak September

The broader US jobs trends are good enough to withstand a weak September report. Many fewer jobs than expected - 1,42,000 - were created last month as workforce participation fell. Yet knee-jerk reactions suggesting that the labour market is suddenly in ill-health are exaggerated. Underemployment, long-term joblessness and other metrics are still showing steady improvement.

The jobs picture has been improving only gradually, but for long enough that the overall result is the creation of 12.7 million jobs since the nadir in 2010 and a decline in the unemployment rate from 10 per cent that year to 5.1 per cent last month - the same as in August, and approaching the range economists mostly reckon represents sustainable full employment. It's perhaps not surprising that nonfarm payroll growth should trend lower - although it's still averaging around 200,000 new positions a month over the past six months.

Meanwhile, Americans working part-time because they need to for economic reasons, as one example, totalled just over 6 million - the lowest number in seven years. That helped drive down a broader measure of underemployment, known as U-6, to 10 percent in September - the lowest since May 2008.

There are signs of improvement in long-term unemployment, as well. At 26.6 per cent of all unemployed people, the size of the group without jobs for more than 27 weeks was the second-smallest since early 2009. The portion of the labour force looking for work having lost a job also ticked down to a new post-recession low of 2.5 per cent in September.

The labour force participation rate remains a big caveat. Only 62.4 per cent of potential workers are in a job or actively looking for work, a new long-term low. This is, however, a tricky figure that is influenced by demographic changes, like the large baby boomer generation reaching retirement age.

A more convincing sign that the labour market isn't as tight as the headline unemployment rate suggests is that there is not yet much sign of wages being forced higher.

While there's no justification for hanging out a "mission accomplished" banner, one somewhat weak-looking month of data doesn't mean the US economic recovery is off course. September's figures may simply reflect a job market that's finally nearing a healthy balance.