Total nonfarm payroll employment rose by 661,000 in September, while the unemployment rate declined by 0.5 percentage point to 7.9%, according to the latest employment report from the Bureau of Labor Statistics.
Although the job growth has slowed when compared with August’s pace, the slight improvements “reflect the continued resumption of economic activity that has been curtailed due to the coronavirus pandemic and efforts to contain it.”
The number of unemployed persons fell by 1 million to 12.6 million last month, marking the fifth consecutive month of declines for both the unemployment rate and the total number of unemployed persons.
Among the unemployed, the number of persons on temporary layoff decreased by 1.5 million in September to 4.6 million. This measure has decreased considerably from the high of 18.1 million in April, but is 3.8 million higher than in February. The number of permanent job losers increased by 345,000 to 3.8 million last month and the number of job leavers rose by 212,000 to 801,000.
“More concerning than the headline unemployment rate is the long-term economic scarring from workers dropping out of the labor force altogether,” says Odeta Kushi, deputy chief economist at First American. “A lower labor force participation rate tends to go hand in hand with slower wage growth. For the housing market, slower wage growth could chip away at house-buying power, while the ongoing supply shortage continues to put upward pressure on house price appreciation, with repercussions for affordability.”
For September, the labor force participation rate decreased by 0.3 percentage point to 61.4%, 2 percentage points lower than in February.
On a positive note, the data showed notable job gains in leisure and hospitality, in retail trade, in health care and social assistance, and in professional and business services, but employment in government declined over the month, mainly in state and local government education.
“Government employment fell by 216,000 this month, driven by large declines in the state and local education sectors. Given the significant disruptions to the education system caused by the COVID-19 pandemic, hiring in this sector has been unseasonably low,” says Doug Duncan, chief economist at Fannie Mae. “Within the private sector, the bulk of hiring came from service-providing industries, with robust job gains in retail trade (+142,000), health care (+108,000), and leisure and hospitality (+318,000), a welcome sign for some of the industries hit hardest by the pandemic.”
Construction employment increased by 26,000 in September, with growth in residential specialty trade contractors (+16,000) and construction of buildings (+12,000), but still below its February level by 394,000.
“Despite recent gains, total nonfarm employment is still approximately 7% below February’s peak, reflecting the dramatic and sudden depth of this recession,” continues Duncan. “We also note that there is reason to think this month’s report is subject to a higher degree of uncertainty than normal. The BLS noted that for both the household and payroll surveys, response rates were below their recent averages, potentially adding volatility to the results and reflecting the challenges of data collection in the current environment.”
