More Americans were hunting for work in September, a welcome new trend that appears to have begun the month before. This time, however, far fewer were successful, as the U.S. economy added just 29,000 jobs, about a third of what economists had forecast.

Reflecting the surge of new and returning job seekers, the Labor Department said today that the unemployment rate rose from 4.1% to 4.2% as the labor force participation rate again climbed.

NMMA chief economist Shawn DuBravac told Trade Only Today that the jobs numbers do suggest that more people were looking for work and couldn’t find it, “but the report is more nuanced.”

“The number of people working increased, but the number of people wanting to work increased more,” DuBravac said. “The strengthening economy likely brought more people into the labor market in September. The small increase in unemployment isn’t worrisome — yet. There are a number of signs that the economy is strengthening, but employers remain cautious. The most concerning data were the weak payroll growth and the downward revisions. But in many ways, the results are in line with what we have seen much of this year.”

Former NMMA president Thom Dammrich termed the increase in labor force participation a “good sign and consistent with the perspective that more people are either working or looking for a job, and unemployment ticking up indicates there are more job seekers than jobs — or at least the right kinds of jobs.

“I suspect we have a mismatch between what employers are seeking and what workers have to offer, but there is nothing in this report to indicate a sharp deterioration in conditions,” Dammrich told Trade Only Today. “Unemployment has been stuck in a narrow band since March. Generally, this is more of the same low-hire, low-fire environment where employers are not aggressively adding employees nor slashing jobs.”

The government’s report revised August’s substantial job gains downward from 162,000 to 133,000 and cut 31,000 from the July numbers, resulting in a net loss of 10,000 for the economy that month.

“Today’s report suggests that the strong job growth in August was more noise than signal,” Ian Wyatt, senior vice president and chief economist at recreational marine lender Huntington National Bank, told Trade Only Today. “To see the signal, it is better to look over a few months of data. Over the past three months, the economy gained an average of 51,000 jobs per month. This is a job growth rate that is sustainable and about in line with working-age population growth.

“The low-hire, low-fire dynamic is holding steady, and wage growth is gradually slowing,” Wyatt added. “Steady, solid job growth is not fast enough that the Fed would need to hike rates, and in fact will make the Fed more hesitant to hike. This jobs data, combined with below-expectations inflation data earlier this week and recent comments by Fed officials, push out when we expect the next rate hike. We now expect no rate hike in October and only put 50% odds on a December hike.”

The Fed’s October meeting is set for Oct. 27-28, which means it will conclude on the first day of the Fort Lauderdale International Boat Show.

“If the Fed holds rates right as FLIBS opens, that should reduce near-term anxiety for buyers and may support equity markets, which generally boosts confidence for purchasers of high-end discretionary products,” Dammrich said. “I think the industry should expect solid traffic in Fort Lauderdale, but more effort may be needed to close deals.

“Manufacturers and dealers should be prepared with a clear narrative on the macro environment and why this is a good time to buy,” he added. “Manufacturers of premium products should have a strong show. Middle-market and, increasingly, lower-end product may have a more challenging show as wages fail to keep up with rising costs.”

DuBravac said boating hinges on two things: the ability to buy and the confidence to buy.

“A sluggish labor market can lengthen purchase decisions, even among consumers who are gainfully employed,” he said. “While consumers remain apprehensive, they are holding up well. Wage growth is still solid. Spending is strong. Economic growth appears to be broadening.”

DuBravac sees a “strong probability” that the Fed holds rates steady this month.

“While the market was anticipating an October hike as recently as earlier this week, I believe the Fed will take a slow and measured approach to rate hikes,” DuBravac said. “It takes about six months for a rate hike to fully transmit through the economy, and I believe the Fed will give rate hikes more time to work and avoid overshooting (raising rates too high, too quickly).

“The weak jobs report, coupled with the most recent inflation numbers, reinforces the belief that the Fed does not need to act quickly or aggressively to achieve its objective,” he added. “The Fed has made the case that the economy is strengthening and that the labor market is resilient enough that the Fed could focus more heavily on inflation. With the weaker job numbers, the Fed will have to take a more nuanced approach that keeps a closer eye on the labor market.

“Anything that points to a stronger labor market or broadening economic growth would give the Fed more latitude to raise rates more quickly. Anything pointing to strong consumer spending or worse-than-expected inflation would also likely give the Fed more confidence in rate hikes. Any signs of a weaker labor market would push in the opposite direction. If the Fed holds in October this is a pause, not the beginning of a rate-cutting cycle. The Fed has entered a tightening cycle that will likely last for at least the next year. Slower inflation growth is not the same as inflation rates returning to target.”

Drew Pope, president of Independent Boat Builders Inc., said he does not believe more people were necessarily looking for jobs in September, “as there doesn’t appear to be a corresponding increase in temporary layoffs or permanent job losses last month, and the labor force participation rate increased just slightly.” It rose from 61.6% in August to 61.8% in September.

“The major story for our builders is rising material costs and inflation, and U.S. consumers are sharing our same concerns, as reflected in the recent consumer sentiment and confidence surveys,” Pope told Trade Only Today. “Retail demand is often correlated with those metrics, and with consumer sentiment at lower levels than during the Great Recession, there may be cause for concern, though we know that not all buyers are impacted equally by these rising costs, as evidence of a ‘K-shaped’ economy becomes clearer. Those individuals in the market for a new boat likely have greater net worth and more disposable income, and are less likely to be impacted by a short-term increase in everyday living expenses.”

“This was further emphasized in ISM’s Manufacturing PMI report this week, with a jump in the pricing index to 77.9% from 71.1% in August, with two dozen commodities reporting increases in cost — attributable to both petroleum export constraints due to the war in Iran and additional tariffs to trade partners,” Pope added.

“Lumber costs domestically have jumped by double-digit percentage points as tariffs went into effect in Canada, further complicated by impacts from wildfires this past summer and panic-buying behavior within the U.S. Diesel prices hitting all-time highs has added fuel to the fire — pun intended — as well. Our continued focus at IBBI is to fight increasing input costs for our manufacturers that are furthering the affordability issue in our industry.”

The Labor Department said American workers’ average hourly earnings rose only 5 cents, or 0.1%, to $37.81 in September, and they were up just 3% on an annual basis. That left pay gains behind the pace of inflation, as measured by the Personal Consumption Expenditures Price Index, which rose by a cooling 3.4% in August, the most recent month for which data were available. The Fed tracks the core PCE price index, which was up 3% in August, as its target interest rate for the economy.

Dammrich said a bigger concern than the jobs numbers for the economy and the boating industry is that wages are not keeping up with rising costs “and that job gains are concentrated in three industries — health care, construction and manufacturing — and are not broad-based. The job market is cooling but not collapsing, and inflation is up, but modestly. I think this gives the Federal Reserve license to hold rates at their October meeting, which they likely prefer to do in front of a major election anyway.”

The main job driver in September was the bellwether health care category, which added 17,000 jobs. Construction added 11,000, and manufacturing added 9,000. Some categories, such as financial activities employment, saw a drop during the month.

Investor and DePaul University clinical economics professor Brian Thompson agreed with other sources for this story that more people went hunting for jobs in September and that the economy didn’t make room for them.

“When participation and unemployment rise together and only 29,000 jobs are added, job seekers are coming in faster than employers are hiring,” Thompson told Trade Only Today.

“Many of them are coming back because prices are rising faster than paychecks. We’re still in a low-hire, low-fire economy, but it’s getting harder to land a job. For the boating industry, that means two different buyers. Buyers with secure jobs and strong portfolios are still in the market. Buyers who need financing, especially first-time buyers, are on the fence.”

Thompson also expects the Fed to keep its benchmark interest rate steady later this month.

“It raised rates in September and signaled one more hike,” he said. “Since then, inflation has come in a little cooler, and job growth has nearly stalled, which gives the Fed a reason to pause and watch. But 3.4% inflation is still above their 2% target. Oil above $100 a barrel also keeps another hike possible. What decides it is the September inflation report in mid-October, energy prices and whether layoffs start to rise. With wages up 3% and prices up 3.4%, households are falling behind, and that alone will slow spending.”

As for the Fort Lauderdale show, Thompson said that although he is not a boating-industry expert, “I would expect a strong show at the top of the market and a slower one in the middle. Fort Lauderdale draws wealthy, often cash buyers who aren’t held back by rates. A Fed hold on opening day would take away the fear of another hike.

“Financed buyers are a different story,” he added. “September’s hike has already raised their monthly payments, by roughly $31 a month on a $200,000 boat loan, and fuel costs are adding to the cost of owning a boat. For the rest of the fall season, dealers who close deals will be the ones offering financing incentives and accessible pricing on older inventory.”