October 9, 2007—The labor market created 110,000 net new jobs in September, but the unemployment rate inched up to 4.7%. Concurrently, the ISM index fell to 52.0 but remains in expansionary territory. In August, factory orders decreased a larger-than-expected 3.3% while consumer credit rose $12.2 billion to $2.47 trillion.

Employment Situation
The labor market created 110,000 net new jobs in September, following an upwardly revised 89,000 increase in August. The overall job growth was driven by the service-producing industry, which added 143,000 jobs. The goods-producing industry, on the other hand, shed 33,000 jobs from the payroll. Average hourly earnings increased from $17.50 to $17.57, a 0.5% uptick. Last, the unemployment rate inched up from 4.6% to 4.7%.

ISM Index
For the third consecutive month, the ISM index inched down, decreasing 0.9 points in September to 52.0, its lowest reading since March. Manufacturing activity, however, is still in expansionary territory (above 50). New orders fell to 53.4 while production dropped to 54.6. On the inflation front, "prices paid" fell to 63.0 and has steadily decreased from its high of 73.0 in April. The ISM index average in the 3^rd quarter was 52.9, down from 55.2 during the 2^nd quarter.

Factory Orders
Factory orders fell a larger-than-expected 3.3% in August, nearly erasing the 3.4% increase in July. The decrease was driven by a 4.9% drop in orders for durable goods and a 1.6% decline in nondurable goods orders. Orders for core capital goods, which are a proxy for business investment spending, decreased 0.5%. Furthermore, shipments fell 1.6% in August as inventories inched down 0.1%. Unfilled orders, however, grew 1.2%.

Consumer Credit
Consumer credit rose $12.2 billion to $2.470 trillion in August, a 5.9% (annualized rate) increase. The increase was driven by growth in both revolving and nonrevolving credit, which grew 8.4% and 4.8%, respectively. Going forward, demand for revolving credit should continue to increase as people draw less from home equity and have to finance expenditures with credit cards.