US Sept Payrolls Up; Unemployment 7.9%

The September employment report Friday showed solid, but softer than expected payrolls improvement and a modest increase in hourly earnings. A sharp drop in local education payrolls was a key factor.

At the same time, the unemployment rate fell modestly in the month to 7.9%, still elevated compared to the pre-COVID rate of 3.5% in February.

Nonfarm payrolls rose by 661,000 in September, well below the 900,000 gain expected. This followed an upward revision to August payrolls to a 1.489 million gain and an upward revision to July payrolls to a 1.761 million increase.

Private payrolls rose by 877,000 after a decrease of 216,000 in government payrolls is excluded. Analysts had expected private payrolls to rise by 900,000.

Local education payrolls fell by 231,000 in the month. With schools closed, support workers in cafeterias and custodians are not currently needed. This should reverse itself as more systems bring students back into physical classrooms.

Leisure and hospitality jobs rose by 318,000 after a 143,000 increase in August, with most of the gains at restaurants and bars as reopenings continued.

The retail sector added 142,000 jobs in September. Early data suggest that seasonal hiring for the holidays has begun, but this year there will be large hiring at online services such as Amazon rather than brick and mortar stores.

The services sector added a total of 784,000 jobs in September after a 977,000 increase in August.

Manufacturing jobs rose by 66,000 and construction added 26,000 jobs. The goods sector added a total of 93,000 jobs.

Average hourly earnings rose by only 0.1% after a 0.3% gain in August, putting the year/year rate at a 4.7%, still elevated compared to the 3% rate before the shutdowns.

In the household survey, the unemployment rate fell to 7.9% from 8.4% in August, a larger drop than expectations for a decrease to 8.2%, but still sharply above pre-COVID levels.

The BLS again cited the issue of mislabeling temporarily furloughed workers as unemployed on temporary layoff rather than as simply absent from work. However, this month, they said the impact on the not seasonally adjusted figure would have been about 0.4 percentage point, and even that may be an overestimation of the miss.

Before seasonal adjustment, the unemployment rate was reported at 7.7% after 8.5% in August, so even the full 0.4 percentage point adjustment would leave the September rate at 8.1% compared with 9.2% in August, when the miss was roughly 0.7 percentage point.

The labour force participation rate fell to 61.4% from 61.7% in August, with many unemployed workers leaving the labour force. In September, the number of household employed rose by 275,000, while the number of unemployed fell by 970,000, indicating that most of the decline in the unemployment rate was due to discouraged workers leaving the labour force.

The wider U-6 rate, which represents those underemployed and those working part-time rather than full-time, fell to 12.8% from 14.2% in August. The number working part-time for economic reasons plunged by 1.278 million to 4.936 million, some of which transitioned to full-time work, but most dropped out.

Kevin Kastner

kevin@macenews.com

www.macenews.com

Julie Ros

Share This

Share on facebook
Facebook
Share on google
Google+
Share on twitter
Twitter
Share on linkedin
LinkedIn
Share on reddit
Reddit

Related Posts in