September Employment Report

The US economy created jobs at a much slower rate than expected in September, a pessimistic sign of the state of the economy although the total was held back considerably by a sharp drop in public employment.

Non-farm payrolls only increased by 194,000 during the month, compared to 500,000 according to the Dow Jones estimate, the Labor Department reported on Friday. The unemployment rate fell to 4.8%, better than the expectation of 5.1% and the lowest since February 2020.

The overall figure was affected by a decline of 123,000 government wages, while private sector wages increased by 317,000. The decline in the unemployment rate came as labor market participation declined slightly. A larger number that includes discouraged workers and those in part-time jobs for economic reasons has fallen to 8.5%, also a pandemic-era low.

Despite the low number of jobs, wages have risen sharply. The 0.6% monthly gain pushed the year-over-year increase to 4.6%.

Leisure and hospitality again led job creation, adding 74,000 jobs. Professional and business services contributed 60,000 while retail trade increased by 56,000.

The job gains were spread across various other sectors: transportation and warehousing (47,000), information (32,000), social assistance (30,000), manufacturing (26,000), construction (22,000) and wholesale trade ( 17,000).

Markets reacted little to the news, as Dow futures stabilized for the morning as investors digested what was a mixed report.

The September 12 investigation week came just as Covid cases were peaking in the United States. The spread of the delta variant has since cooled, with cases recently falling below an average of 100,000 per day.

There was good news in Friday’s report from previous months.

The already strong July gains were revised up from 38,000 to 1.053 million, while the big disappointment in August was also revised up to 366,000 from the 235,000 initially reported.

The report comes at a critical time for the economy, with recent data showing solid consumer spending despite rising prices, growing manufacturing and services and soaring housing costs.

Federal Reserve officials are closely monitoring the employment figures. The central bank recently indicated that it was ready to start withdrawing some of the extraordinary aid it provided during the pandemic crisis, mainly because inflation met and exceeded the 2% target of the Fed.

However, officials said they believe the labor market is still far from full employment, a prerequisite for higher interest rates. Market prices currently indicate that the first rate hike will likely come in November 2022.

This is last minute news. Please come back here for updates.