The headlines say that the September jobs report was weaker than expected, but the reality is that nothing much has changed: the economy continues to add jobs at a fairly unremarkable pace. The one notable feature of the report was a significant decline in part-time employment which invalidates the popular narrative which claims that the economy has only been adding part-time jobs this year.
The chart above shows the level of private sector employment according to two survey methods. It's quite apparent that the economy continues to add jobs, and that it won't be long before the number of jobs reaches a new post-recession high. It's been an anemic recovery, but nonetheless definitely a recovery.
As the chart above shows, the unprecedented decline in public sector jobs has likely come to an end. The economy has gotten rid of a significant amount of public sector bloat since the end of the last recession, and this bodes well for the future since it means the economy is fundamentally more efficient.
According to the household survey, part-time employment dropped by 828K since its all-time high last July. As I noted here, the rise in part-time employment that we saw in the July report was most likely statistical noise, and today's report confirms that. We now see that the number of part-time jobs hasn't changed much at all for the past four years. Relative to total private sector employment, part-time jobs have fallen to their lowest level since the recovery started. This recovery has seen relatively more part-time jobs than previous recoveries, but it's nothing extraordinary.
Although the September employment gains were a bit disappointing, there is no reason to think that the labor market fundamentals have deteriorated. Indeed, the surge in part-time employment that we saw earlier this year now appears to have been a statistical mirage.
I don't see any new implications for Fed policy coming from this report. The economy is slowly but surely progressing, albeit in a disappointingly slow fashion. If anything, it's hard to find much justification here for the Fed to continue its extraordinary Quantitative Easing policy. QE doesn't create jobs, it mainly satisfies the world's demand for risk-free assets.