September’s jobs creation comes up short with gain of just 194,000

Although the U.S. economy generated jobs in September at a slower pace than expected, this is a worrying sign of its state. However, the number was significantly impacted by sharp declines in government employment.

The Labor Department reports Friday that nonfarm payrolls increased by only 194,000, in comparison to the Dow Jones estimate at 500,000. It was 4.8% which is lower than 5.1% expected and its lowest level since February 2020.

While the headline figure was hurt by a decline of 123,000 in government payrolls and an increase of 317,000 private payrolls,

As the labor force participation rate dipped, the drop in jobless rates was due to fewer people being out of work during the recession. coronavirus pandemicMany have returned back to the workforce. An even wider number, which also includes discouraged workers or those who hold part-time work for economic reasons, declined to 8.5%. This is also a low from the pandemic era.

Nick Bunker (economic research director, Indeed job-placement site), said that “this is quite deflating.” This year was a year of false dawns in the labor market. There is high demand for workers, and millions want to return to work. However, the employment market has not found its feet.

The markets did not respond to the announcement, with Dow futures flat at the beginning of the day and mixed yields on government bonds as investors digested this mixed bag.

Wages rose sharply despite the low number of jobs. A 0.6% month-over year increase pushed the annual rise to 4.6%. Companies use wage hikes to counter the ongoing labor shortage. In September, the available workforce fell by 183,000 and now stands at 3.1 million below where it was just prior to the outbreak of pandemic.

Andrew Hunter (senior U.S. economist, Capital Economics) stated that labor shortages continue to exert severe upward pressure on wage rates… while the return low-wage leisure workers and hotel workers should be depressing average wages.”

The sector saw 74,000 new jobs created by leisure and hospitality, while the unemployment rate dropped to 7.7%, from 9.1%. Professional and business services accounted for 60,000, with retail increasing by 56,000.

There were many other industries that saw job gains: transportation and warehousing (47,000), information (32,000), social aid (30,000.), manufacturing (26,000), construction (22,000), and wholesale trade (17,000).

According to Gus Faucher (chief economist at PNC), the local government’s education job losses were 144,000. This could have been caused by seasonal changes in numbers.

Just as Covid cases in America were at their peak, the survey week of September 12 was complete. Since that time, the spread of delta has slowed down. with cases most recently droppingBelow an average daily 100,000

Black unemployment fell to 7.9%, from 8.8%. This was mainly due to a decrease in male labor force participation rates of 66.7% to 66%.

Some good news was found in Friday’s update from the previous month.

The July gains, already strong, were raised by 38,000 to 1.0913million, and August’s huge drop in sales was also revised up to 366,000, from 235,000 initially.

The employment-to-population level increased to 58.7%, its highest since March 2020.

It comes at an important time in the economy’s history. Data shows that consumers are spending more despite higher prices, growing growth in the manufacturing sector and rising housing costs.

Federal Reserve officials will be closely monitoring the job numbers. Recent statements by the Fed indicate that they are ready to begin reducing the amount of extraordinary assistance provided during the pandemic crises. The reason for this is because inflation has exceeded and surpassed the Fed’s goal of 2%.

Officials have stated that they believe the job market is still far from full employment. This would be a requirement for any interest rate increases. Current market pricing indicates that the first rate rise will be in November 2022.

The jobs report today has discredited expectations of tapering after it appeared almost complete. It doesn’t take much for the Fed to convince them that tapering should start immediately, but with only 194,000 jobs, it suggests that the labor force is far from meeting the substantial progress goal,” stated Seema Shah of Principal Global Investors.