Unemployment falls below 6% for first time since 2008 as U.S. adds 248,000 jobs

Jobless rate falls to 5.9% from 6.1% amid broad gains in hiring

WASHINGTON (MarketWatch) — Jobs growth accelerated in September and hiring during the summer was stronger than initially reported, reflecting a U.S. economy that entered the fall with a good dose of momentum.

The U.S. added 248,000 jobs outside the farm sector, the Labor Department reported Friday. That topped the MarketWatch-compiled economist forecast of 220,000.

Unemployment also fell to 5.9% from 6.1% — the last time the rate was below 6% was in July 2008 — mainly because more people found work. Yet more Americans also stopped looking for jobs, reducing the percentage of people in the labor force to a 36-year low.

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Robust employment gains last month largely dispelled worries about a potential U.S. slowdown after a preliminary report in August showed the economy gained a disappointing 142,000 jobs. What’s more, newly revised figures reveal that hiring was stronger in August and July than previously reported.

The government said the 180,000 new jobs were created in August, up from a preliminary 142,000. July’s gain was revised to 243,000 from 212,000.

So far in 2014 the economy has gained an average of 227,000 jobs a month, up 17% from the 2013 pace of 194,000. The nation is on track to add the most jobs in nine years.

In September, the professional ranks swelled by 81,000 to lead the way. One-fourth were temporary jobs, however.

Retailers also added 35,000 positions, though as many as half of them were workers returning to their jobs at a New England grocery chain after an ownership feud kept them off duty in August.

Health-care providers hired an additional 23,000 workers, bars and restaurants boosted staff by 20,000 and construction companies took on 16,000 new workers.

Manufacturers added just 4,000 jobs, however.

In another sign of strength, the amount of time people worked each week also rose a tick to 34.6 hours to reach a postrecession high. Hours worked usually rise when the economy strengthens.

The only major red flag in the report was a small decline in average wages to $24.53 an hour. Over the past 12 months wages have risen a scant 2%, down from 2.1% in the prior month, meaning that most workers are just barely keeping ahead of inflation.

Read: faster wage growth AWOL during the recovery.

The sluggish pace of wage growth puzzles economists, but most expect earning to rise as the pool of labor shrinks and companies have to bid more to attract and maintain workers.

“As the labor market continues to pick up momentum, we would expect wage gains to accelerate modestly,” said Joshua Shapiro, chief economist at MFR Inc. “We are just not there yet.”

In remarks late on Friday, President Barack Obama made a similar point.

“The reason [employers are] not giving their workers raises is because, frankly, they don’t have to, because the labor market’s still somewhat soft and people are afraid that, you know, if I leave this job I may not find something,” Obama said.

Slow wage growth since the recovery began five years ago might be the biggest restraint now on economic growth despite widespread signs of progress. It’s also an area that Federal Reserve Chairwoman Janet Yellen has specifically cited as needing improvement.

Still, the acceleration in hiring is almost sure to put more pressure on the Fed to lift interest rates next year for the first time since 2008.

What might keep the Fed on hold is slowing growth in the global economy and more political unrest in the Mideast and Eastern Europe. Concerns that a weaker worldwide growth could spill over into the U.S. has roiled financial markets over the past few weeks.

“The United States is not an island,” said Lawrence Creatura, a portfolio-investment manager at Federated Investors.. “We are very connected to the global economy.”

Many U.S. executives also say it’s getting harder and harder to find well-qualified workers, so a lack of skilled job prospects could also act as a ceiling on U.S. economic growth.