The news that the economy added just 148,000 jobs in September isn't great news -- but the news under the headline may be that, finally, the economy is creating the right kind of jobs.
First, the bad news. The job gains were 32,000 short of expectations, setting off a reflex rally in bond markets that points to expectations of the Federal Reserve extending monetary easing, setting bond mavens' hearts aflutter. Unemployment dropped to 7.2% from 7.3% in August.
The good news is that several sectors that are essential to the hopes for a 2014 recovery that makes a real difference in people's incomes and prospects did very well in September.
Topping that list is a gain of 20,000 construction jobs, for the first material gains in this huge, highly cyclical and very depressed sector of the economy. Construction job gains of 15,000 to 20,000 a month are essential to a recovery that generates 250,000 jobs a month overall. And this is the first month since February that it has happened in the Labor Department survey.
The department also reported 22,000 new government jobs, including state, federal and local workers. Governments are still down almost 800,000 workers from April 2009, compared with a gain of more than 2.1 million in the 1990s expansion. Whether government should grow as fast as the rest of the economy is a political question, settled by elections. But every recent U.S.recovery until this one has included some government employment growth. When this recovery looks more like past cycles, that is a good thing.
The numbers were also pretty good in areas like business services (though the predominance of temporary jobs there is something to watch), transportation and retailing. Car dealers and home improvement stores behaved as they should in an expansion, adding jobs last month.
The weak spots included manufacturing, which gained just 2,000 jobs, and restaurants and bars and hospitals, which showed slower or negative growth.
Slower growth in hospitals isn't bad news — it's the flip side of health-care cost containment that is one of the most beneficial, if poorly understood, trends in the economy. And the restaurants and bars have been growing strongly. For them to take a step back isn't that worrisome. If consumer confidence is strong enough to get people building more houses and buying more cars, the leisure business will fix itself.
Bottom line: 148,000 new jobs isn't awesome. But seeing a turn in construction and government employment — if they last — is a step toward turning this stop and start recovery into one that can drive unemployment toward 6% or even lower.