Business

Actions

What The Six-Year Unemployment Low Means For U.S. Economy

At 5.9 percent, the U.S. unemployment rate has hit a six-year low. But what do the jobs numbers really mean for the economy?
Posted

For the most part, September jobs numbers look pretty good. 

HAMPTON PEARSON VIA CNBC"Up 248,000. September nonfarm payrolls increased by 248,000 jobs. The unemployment rate is 5.9 percent."

And the headline you're probably seeing most is the six-year low in the unemployment rate. 

But what do the numbers released Friday actually mean for the economy? To understand that, you have to understand how the numbers are used. 

Within an hour of the release of the jobs numbers, The Wall Street Journal reported the U.S. dollar rose in value against the yen and euro.

That's because investors use the numbers — released the first Friday of every month — to make predictions about the future strength of the economy, as well as potential changes to interest rates.

And some analysts suggested that Friday's strong numbers could encourage the Federal Reserve — already mulling a rise in interest rates — to do so sooner rather than later. A rise in interest rates could lead to caution in the markets. 

Trends in interest rates are one of several predictions investors make using the jobs report, making it one of the most anticipated indicators in the economy. 

But as an individual you might have trouble sensing the good news in the jobs numbers. The seasonally adjusted unemployment rate for African-American men, for example, remains high at 11 percent.

And Bloomberg reported last month that economic recovery in the country was unequal region to region.

On top of that, Friday's numbers showed that 97,000 people have either stopped working or are looking for work. That, of course, contributes to a lower unemployment rate. But considering the number of jobs added, we're definitely seeing a pattern of job growth: 48 months straight. 

This video includes images from Getty Images.