September's jobs data came in stronger than expected. It contains a couple of warts but stocks rallied and it didn't sway experts' forecasts for a mid-2015 interest rate hike. Jeanne Yurman reports.
The labor market is the heartbeat of the American economy. And September's employment report showed that heartbeat is strong and steady. 248,000 jobs were created last month - better than the 215,000 forecast. And July and August's numbers were revised higher. Job additions were broad-based across industries with even factories adding workers after a drop in August. And the unemployment rate shrank to 5.9 percent - the lowest in six years. But the data did have a couple of ugly warts. Workers' paychecks didn't grow. In fact they shrank by a penny in September. Wage growth has been stagnant, a fact acknowledged by White House spokesman, Jason Furman. SOUNDBITE: JASON FURMAN, CHAIRMAN, WHITE HOUSE COUNCIL OF ECONOMIC ADVISERS (ENGLISH) SAYING: "Wages just aren't growing the way they should be growing. They're a little bit faster than inflation but only a little bit faster than inflation that's why the President talked about raising the minimum wage, investing in infrastructure, investing more in education ...and the entire economic agenda that he's pursuing." And that drop in the jobless rate? Much of that is due to discouraged workers leaving the workforce. The percentage of the population with jobs or looking for one sank to the lowest level since 1978. But the good news seemed to outweigh the bad news. Stocks rallied and Treasury yields inched up on the report, which caps off the strongest six-month stretch for payroll gains since before the recession in 2007. And the balance between good news and bad didn't shake Wall Street's bets that the Fed's first hike in interest rates will still come in mid-2015. JP Morgan's Jeff Greenberg: SOUNDBITE: JEFF GREENBERG, CHIEF ECONOMIST, PRIVATE BANK, JP MORGAN (ENGLISH) SAYING: "Those bad factors in the employment report often times make us encouraged about the length of the expansion, the fact that the Fed isn't in any place to hike quickly and so you can get kind of a good reading out of those worrisome factors." With the latest job data and rate worries pushed aside, investors' now will likely be facing a volatile fourth quarter. Nick Colas, Chief Market Strategist of ConvergEx says October is historically rocky. Layered on top of that are already healthy stock valuations, earnings season, and worrisome global issues ranging from pro-democracy protests in Hong Kong to the spread of the Ebola virus. SOUNDBITE: NICK COLAS, CHIEF MARKET STRATEGIST, CONVERGEX (ENGLISH) SAYING: "Geopolitics. That's a real wild card. We have so many different things to focus on that it's a very tough call to say stocks discount those fully and that will be the risk for the month and for the quarter." So while October is kicking off with a solid jobs report, Colas and others' best advice to investors is to proceed with caution.