A September Surge In New Jobs With Unemployment Dropping To 5.9% [Dow Jones Industrial Average 2 Minute]

jobsDoug Short: Here are the lead paragraphs from the Employment Situation Summary released this morning by the Bureau of Labor Statistics:

Total nonfarm payroll employment increased by 248,000 in September, and the unemployment rate declined to 5.9 percent, the U.S. Bureau of Labor Statistics reported today. Employment increased in professional and business services, retail trade, and health care.

Today’s report of 248K new nonfarm jobs was substantially better than the Investing.com forecast of 215K, and it was accompanied by a major upward revision of the August data from 142K to 180K new jobs. The unemployment rate dropped from 6.1% to 5.9%, beating the Investing.com expectation of no change.

The unemployment peak for the current cycle was 10.0% in October 2009. The chart here shows the pattern of unemployment, recessions and both the nominal and real (inflation-adjusted) price of the S&P Composite since 1948.

Unemployment is usually a lagging indicator that moves inversely with equity prices (top chart). Note the increasing peaks in unemployment in 1971, 1975 and 1982. The inverse pattern becomes clearer when viewed against real (inflation-adjusted) S&P Composite, with its successively lower bear market bottoms. The mirror relationship seems to be repeating itself with the most recent and previous bear markets.

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The second chart shows the unemployment rate for the civilian population unemployed 27 weeks and over. This rate has fallen significantly since its 4.4% all-time peak in April 2010. It dropped below 3% in April of last year and is now at its post-recession low of 1.9%.

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The next chart is an overlay of the unemployment rate and the employment-population ratio.

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