Crawling or stalling? That’s the question hanging over the U.S. economy amid fresh evidence the once-hot labor market is losing steam.

Nonfarm payrolls expanded by 136,000 in September, according to a Labor Department report Friday that missed the median estimate of economists. That brought the average gain this year to 161,000, compared with 223,000 throughout 2018. On top of that, average hourly earnings rose 2.9% from a year earlier, the weakest rate since mid-2018.

Yet the unemployment rate declined to a fresh half-century low of 3.5%, with the pace of hiring remaining above what’s needed to accommodate population growth. And pay for production and nonsupervisory workers held up better than the overall numbers.

Markets appeared to take the report as a sign growth would hold up.

“The picture is complicated,” said James Sweeney, chief economist at Credit Suisse Group. The labor market is slowing, but there are “no signs that we’re suddenly falling into a recession or something like that.”

Wages and employment are still relatively solid. But risks continue to hang over the world’s largest economy, including President Donald Trump’s trade policy and weakness abroad, while the effect of last year’s tax cuts keeps wearing off. Trump took the chance to boast about the jobless rate on Twitter, but manufacturing jobs declined for the second time this year.


Friday’s report caps a week of U.S. economic data that whipsawed stocks and sent already-low Treasury yields tumbling, led by a key manufacturing gauge that sank deeper into contraction with the worst reading in a decade. A slowdown also threatens Trump’s re-election prospects next year, with the president frequently staking his message on a strong economy.

“This is a muddled middle sort of report,” Mohamed El-Erian, chief economic adviser to Allianz, said in an interview on Bloomberg Television. “It’s not weak enough to confirm that weakness is spreading from global manufacturing throughout the economy, but not strong enough to suggest that we are immune.” El-Erian is a Bloomberg Opinion columnist.

Revisions were a bright spot, adding 45,000 jobs for the prior two months, though the three-month average still fell to 157,000 from 171,000.

The job gains were concentrated in health care and professional and business services. Retail employment contracted for an eighth-straight month, while construction payroll growth remained tepid.

Manufacturers subtracted 2,000 jobs, continuing a trend toward weaker growth and damping one of Trump’s key campaign messages. It likely reflects the slowdown at factories, seen also in data from the Institute for Supply Management, which points to slower production and orders amid weakening demand for goods.

Average hourly earnings were little changed from the prior month, missing estimates for a gain, while the 2.9% annual wage gain fell below all estimates in Bloomberg’s survey of economists. Pay for production and nonsupervisory workers held up, though, with a gain of 3.5%, down only slightly from a decade-high of 3.6%.

The U-6, or underemployment rate, slipped to 6.9%, the lowest since 2000, from 7.2%. Some analysts see this as a more accurate reflection of the labor market as it includes part-time workers who’d prefer a full-time position and those who aren’t actively looking.

— With assistance from Vince Golle and Sophie Caronello.