Jobs report: US economy creates just 194,000 jobs in September
But if you’re optimistic, there’s reason to be optimistic for the future: The investigations behind the jobs report were completed around mid-September when Covid infections started to level off. They have been falling steadily since mid-September, which is reason to be optimistic about job growth in October.
And the report had good news: August’s disappointing report was revised up to 131,000 jobs, meaning employers added 366,000 in the penultimate month. (Even so, the August report fell well short of analysts’ initial expectations.)
“The weak jobs report should come as no surprise given that the survey was conducted near the peak of the Delta Variants wave on September 12,” said Robert Frick, business economist at Navy Federal Credit Union . “Hundreds of thousands of jobs that could have been added in the leisure and hospitality sector alone have had to wait for coronavirus infections and deaths to decline, as is currently the case.”
Daniel Zhao, senior economist at Glassdoor wouldn’t even go so far as to call the report a mixed bag.
“On the one hand, it shows us how the impact of the Delta variant really was… but I hope that with the retreat of the Delta wave, the September report will be the worst,” he said. he told CNN Business.
At the end of the summer, the increase in Covid-19 infections of the Delta variant kept people at home. Many are wary of spending time in large groups.
Hiring at restaurants and bars was low last month as customers avoided traveling and eating. Employers in the leisure and hospitality sector added just 74,000 jobs last month, far underperforming the industry’s average monthly gain of 197,000 this year. The leisure and hospitality industry suffered the worst of layoffs linked to the pandemic last year.
But there are seasonal quirks at work, the BLS warned in its report. Because back-to-school hiring that normally occurs in September was lower this year, seasonally adjusted job numbers have shown a decline.
“Recent job changes are difficult to interpret, as pandemic-related staff fluctuations in public and private education have distorted normal seasonal hiring and firing patterns,” the BLS said.
We already know about this pattern from last year, Zhao said, so it shouldn’t have been a surprise.
“I think many schools are still operating with a smaller workforce than before the pandemic,” Zhao said.
However, hiring resumed at the end of the month, according to Frick, who expects this trend to accelerate through October.
What this means for the Fed
In the September monetary policy update, Fed Chairman Jerome Powell said he did not need the jobs report to be a “knock out” because he believes the labor market recovery is going well. Some of his colleagues, however, might still want to see further improvements, Powell said at the time.
While the U.S. labor market has still not returned to its pre-pandemic strength, it has regained a lot of lost ground. Companies are struggling to find staff, which drives up wages. Average hourly wages in the 12-month period ending in September increased 4.6%, the largest increase since February.
It remains to be seen whether Friday’s job gains will be enough to satisfy policymakers. The Fed does not meet in October. The next central bank meeting will take place in early November, with its policy decision due to be announced on November 3.