According to Friday's Labor Department data, the United States added fewer than expected 194,000 jobs in September. This was a second consecutive monthly decline, and the worst showing on the labor market since December. Experts worry that the economic recovery has been slowed by the pandemics resurgence.
A worker cutting steel. AFP via Getty Images
The Key Facts
According to Bloomberg data, September's job growth was much less than the 500,000 jobs economists expected. It also fell from 366,000 in August. The government stated that despite the disappointing job gains, the US' unemployment rate fell from 8.4million in August to 7.7million in September. This is still significantly higher than the 5 million people expected to be employed in February 2020. The unemployment rate of 4.8% dropped from 5.2% in August. This was a drop of more than one year, but still well above the pre-pandemic levels at 3.5%. Jason Pride, chief investment officer at wealth advisor Glenmede, noted that the 0.4% decrease in unemployment was due to an upward revision in the total number of jobs created in August and July, totaling approximately 169,000. This is the first time the rate has fallen below 5% since March last year. According to the government, there were notable job gains in hospitality, retail, transportation and leisure while public education employment declined monthly. The U.S. economy has recovered roughly 17 million of 22 million jobs that were lost in March and April last year when pandemic-induced shut downs forced companies to reduce in-person business.
The headline jobs numbers were disappointing. They fell below expectations and even below last month's low number. However, Brad McMillan wrote that labor demand is strong with hours worked and the average hourly wage both increasing. He suggested that the problem may be in labor supply or the number people looking for work. The labor force participation rate of 61.6% fell 0.1 percentage point from August, but is still 1.7 percentage point lower than February 2020. McMillan states that people are still afraid to return to work, but he also notes that the "trend could well be improving" after the recent pandemic-caused wave of the delta variant has subsided.
A number of data points have been pointing to continued difficulties in employment despite Thursday's promising unemployment report. The labor market added just 366,000 jobs in August, despite adding over 1 million jobs in July. This is significantly less than the forecasts that called for almost a million more. Mark Zandi of Moodys Analytics stated that the unemployment readings were disappointing. Experts are concerned that the pandemics resurgence may have slowed down economic recovery. For three weeks in September, new unemployment claims were also higher than anticipated.
What we don't know
Jamie Cox, managing partner of Richmond-based Harris Financial Group, stated that the disappointing jobs numbers could raise questions about whether the Federal Reserve will taper or reduce its economic stimulus measures by year's end. Cox stated that there are many positives in this report, such as an increase in hourly earnings. However, it is not enough to hide the fact that the employment picture remains cloudy due to all the Covid-related crosscurrents. The stock market rallied to new heights during the pandemic. However, concerns that the Fed might withdraw its support too soon have contributed to volatility.
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