MNI DATA ANALYSIS: US September Payrolls Rise 134k, 3.7% Rate>

--Hurricane Impact Not Quantifiable 

--Lower Unemployment Rate Reflects Change In Both Employed, Unemployed 

--Hourly Earnings +0.3% After +0.3% in August, Y/Y Rate Falls To 2.8% 

By Kevin Kastner, Shikha Dave, and Harrison Clarke

     WASHINGTON (MNI) - The September employment report released Friday 

was softer than expected, with nonfarm payrolls up 134,000 compared 

with the 188,000 increase expected by analysts and the 202,000 gain 

expected by the whisper number, but followed a net upward revision of 

87,000 in the previous two months, data released by the Bureau of Labor 

Statistics Friday showed. 

     The unemployment rate fell to 3.7% in September from the 3.9% rate 

posted in August, hourly earnings were up 0.3%, and there was a large 

net upward revision to payrolls in the previous two months, showing 

strength outside of the weak headline number. 

     There was an indeterminate impact from Hurricane Florence, which 

occurred late in the survey week. The response rate for both surveys 

were within normal ranges.

--UNEMPLOYMENT RATE FALLS TO 3.7%

     Analysts had expected the unemployment rate to decline to 

3.8% from 3.9% in August. When seen unrounded, the September rate fell 

to 3.683%, so on the low side of 3.7%. The labor force participation 

rate was unchanged from 62.7% in August. 

     The labor force grew by 150,000 after a 469,000 decline last 

month. Household employment rose by 420,000 in September following a 

423,000 decline in August, while the number of unemployed fell by 

270,000. 

--HOURLY EARNINGS RISE AS EXPECTED

     Average hourly earnings rose 0.3% in September after a downward 

revision to earnings in August to a 0.3% gain. Before rounding, 

September hourly earnings were up 0.295%, on the low side of 0.3%. 

     Hourly earnings now stand 2.8% above its year ago level, down from 

2.9% in August. The drop in the year/year rate was due in large part to 

base effects. Hourly earnings rose by 0.5% in September 2017 on the 

impact of the hurricanes that much before dipping by 0.2% in October. As 

a result, the year/year rate is likely to rebound in next month's data. 

     Even at it's current year/year rate, wage growth is still lagging 

behind levels usually seen with this tight of a labor market. 

     The overall average workweek was unchanged from 34.5 hours in the 

previous month. The combination of earnings and hours worked should be 

positive factors for personal income growth in September, but the 

softer gain in payrolls will be a small drag. 

     Private jobs were up 121,000, lower than the 185,000 gain expected. 

Within payrolls, there were solid gains for manufacturing, construction, 

and professional services, offset by drops in retail and leisure and 

hospitality. 

--TRADE GAP WIDENS

     Also released at the same time on Friday, the international trade 

gap widened to $53.2 billion in August from $50.0 billion in July. 

Analysts had expected the gap to widen to $53.4 billion based on a 

slightly wider advance goods trade gap. 

     Exports fell on industrial supplies and materials, while imports 

rose on autos.

     The trade gaps with China and Mexico both widened to record levels 

and remained ammunition for those in favor of further tariffs. The gaps 

with Canada and the EU both narrowed, but both were still wider than a 

year ago. 

     ** MNI Washington Bureau: 202-371-2121 ** 

[TOPICS: MAUDS$,M$U$$$,MT$$$$]