- Nonfarm payrolls rose by 661k in September, falling short of expectations for 875k. The U.S. has now gained back 54% of the jobs lost in March and April at the peak of Covid-shutdowns.
- The unemployment rate fell to 7.9%, down from 8.4% in August. This is less encouraging than it appears, as it was in part due to 695k fewer people in the labor force. The labor force participation rate was down 0.3%-points to 61.4% in the month. Even so, there were 1.0 million fewer people counted as unemployed, which now totals 12.6 million. Also notable, the number of people temporarily unemployed rose 1.5 million in September, a reversal of the trend in recent months.
- In the payrolls data, hiring accelerated in leisure and hospitality (+318k) in September. Almost 2/3rd of those gains were in restaurants and bars (+200k). Job gains across other sectors were fairly widespread. Gains were seen in retail trade (+142k), health care and social assistance (+108k), professional and business services (+89k), transportation and warehousing (+74k), manufacturing (+66k), financial activities (+37k), other services (36k) and construction (+26k).
- Government jobs declined by 216k in September, as employment in local government education (-231k) and state government education (-49k) fell. There was also a drop in the number of temporary Census 2020 workers, which was behind the decline in Federal government employment (-34k).
- In an interesting supplement to the household survey, the BLS noted that the number of people who teleworked due to the pandemic in September (22.7%) was down slightly from August (24.3%). Also, 19.4 million people reported that they were unable to work, or worked fewer hours due to the pandemic, down from 24.2 million in August. However, 10.3% of these people received at least some pay from their employer for the hours not worked. Also, 4.5 million people who were not in the labor force were prevented from looking for work due to the pandemic (down from 5.2 million in August).
Key Implications
- It may have been less than markets were expecting, but the U.S. labor market continued to make progress putting people back to work in September. Still, the drop in labor force participation is concerning. Participation had been gradually improving from its April low, and while we never like to read too much into one month change, it is a figure that bears close watching.
- With the easy job gains due to re-openings largely in the rear-view mirror, we expect the job market progress to be slower going forward, as outlined in our recent forecast. There remain 10.7 million fewer jobs in the economy relative to February, and we expect it will be quite some time before those are all regained as the necessity for physical distancing restrains activity in many sectors.
