US job growth cools in last two months, raising doubts on economy

U.S. hiring slowed sharply in September, and job gains in the previous two months were revised downward — a sour note for a labor market that had been showing signs of improvement.

The Labor Department said Friday that employers added just 142,000 jobs in September, depressed by cuts by manufacturers and oil drillers. The unemployment rate remained 5.1 percent, but only because more Americans stopped looking for work and were no longer officially counted as unemployed.

All told, the labor force participation rate of Americans, the percentage with a job or looking for one, fell to a 38-year low, 62.4 percent.

Some of that decline likely reflects baby boomer retirements, but it also indicates that many Americans remain discouraged about their job prospects. Modest growth and steady if unspectacular hiring hasn't encouraged more people to look for work.

Average hourly wages slipped by a penny and have risen by only 2.2 percent in the past year.

U.S. consumers are spending at a healthy pace, boosting job gains in sectors like retail and hotels and restaurants. But lackluster growth overseas has sharply reduced exports of factory goods.

China, the world's second-largest economy, is slowing. Europe is still weak. Emerging economies such as Brazil and Turkey are struggling to grow at all. Sharply lower oil prices have prompted drilling firms to lay off workers and slash spending on steel pipe and other equipment.

The tepid pace of hiring complicates the picture for the Federal Reserve, which is deciding whether to raise short-term interest rates later this year for the first time in nine years. At its last meeting last month, the Fed ultimately decided to keep its benchmark lending rate at nearly zero.

Federal Reserve Chairwoman Janet Yellen has said that the job market has nearly rebounded to a point that loose monetary policy can be eased, but she said last month that she wants to see further hiring and wage gains in the economy.

“Every aspect of the September jobs report was disappointing,” said Michelle Girard, an economist at RBS Securities. It “strengthens the case that the Fed will be forced to stay on hold over the remainder of the year.”

Job gains have averaged 198,000 a month this year, a solid total but below last year's average of 260,000.

Construction firms added 8,000 jobs, and professional services gained 31,000. Government added 24,000 jobs. But financial services reported no gain, and hiring in education and health fell to the lowest level in nearly a year.

The disappointing numbers come despite some recent data pointing to a healthy economy. Sales of new U.S. homes have jumped to a seven-year high, and September auto sales soared nearly 16 percent from the year before, to the highest level in a decade.

Al Jazeera and The Associated Press