- The US Bureau of Labour Statistics on Friday said the US added 661,000 jobs in September. That came in far below the 859,000 payroll additions expected by economists surveyed by Bloomberg.
- The unemployment rate fell to 7.9% last month, from 8.4%. Economists expected the rate to slide to 8.2%.
- The reading marks the fifth straight month of job additions after the coronavirus pandemic drove historic losses in April. While the unemployment rate has steadily trended lower, several signs point to the US economic recovery weakening.
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The US economy continued to add jobs through September as the economy recovered further from its coronavirus downturn â€” but the figure badly lagged estimates.
American businesses added 661,000 nonfarm payrolls last month, the Bureau of Labour Statistics reported on Friday. The total fell far short of the 859,000 payroll additions anticipated by economists surveyed by Bloomberg, and marked a decline from the revised 1.5 million jobs added in August.
The nation’s unemployment rate fell to 7.9%, from 8.4%, according to the monthly report. That was lower than the consensus economist expectation of 8.2%. The reading is nearly half the 14.7% rate seen during the economic trough in April.
Friday’s release shows a labour market still recovering from the pandemic’s fallout, albeit at a slower pace than seen in recent months.
“The first few months after reopening was always going to see the easy economic gains,” Seema Shah, chief strategist at Principal Global Investors, said. “Now is when additional positive economic surprises become harder to come by.”
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The report delved into how some Americans lost their jobs through the month. 19.4 million people said their joblessness stemmed from their employer ending operations due to the pandemic. That’s down from 24.2 million Americans in August.
The number of Americans citing the pandemic as their reason for not seeking employment fell to 4.5 million, from 5.2 million in August.
The share of Americans telecommuting to work declined to 22.7%, from 24.3% in August.
Though the payroll additions are a welcome sight after the pandemic drove record post-war joblessness, the share of permanently unemployed workers continued to grow. September saw 345,000 additional Americans report their job loss as permanent, bringing the total to 3.8 million.
Many of those permanently unemployed Americans previously reported their job loss as temporary. Accordingly, the number of temporary layoffs fell by 1.5 million Americans to 4.6 million. The shift from temporary to permanent unemployment seen throughout the nation suggests much of the coronavirus’ economic toll will linger into 2021.
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The bigger picture
Labour market indicators released earlier in the week pointed to a better-than-expected pace of recovery. ADP’s September report showed US private companies adding 749,000 payrolls last month, beating the consensus estimate of 649,000 additions.
New US jobless claims for the week ended Saturday also surprised to the upside. Weekly filings for unemployment benefits fell to 837,000, below the economist estimate of 850,000 claims. Continuing claims, which track Americans receiving benefits, fell to 11.8 million for the week ended September 19. That also beat expectations.
Still, the labour market is among the facets of the economy struggling to rebound to pre-pandemic levels. Gauges of US manufacturing and service industry growth have indicated strong growth for several months. The housing market continues to boom, with record-low mortgage rates driving a surge in new and existing home sales.
The Conference Board’s measure of consumer confidence leaped the most in 17 years last month as Americans grew hopeful for the economy’s path forward.
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The encouraging data are poised to square off with still-elevated virus infection rates across the nation. Daily new cases trended higher through September as reopening efforts sparked fresh outbreaks. Economists fear the uptrend could lead states to impose new lockdowns and slow the economic bounce-back even more.
Major layoffs announced this week also threaten the unemployment rate’s steady downward trend. Disney announced Tuesday it will cut 28,000 theme park jobs, roughly 25% of its total US workforce. Royal Dutch Shell revealed plans to slash 9,000 jobs on Wednesday. The US airline industry is poised to lay off as many as 50,000 employees should Congress fail to pass new stimulus.
And odds of a relief package being approved are grim. House Democrats passed their $US2.2 trillion proposal late Thursday without support from Republican lawmakers or the White House. The measure includes a $US600-per-week expansion to unemployment benefits, another round of direct payments, and funding for the airline and restaurant industries. Yet the bill’s price tag is roughly $US600 billion above the White House’s target, and Senate Majority Leader Mitch McConnell is all but certain to reject the measure.
The House is slated to adjourn next week and will not reconvene until after the November elections. The Senate is busy with Republicans’ effort to confirm a new Supreme Court justice. Without a new stimulus measure to boost the economy, many economists are preparing for worse-than-expected growth through the end of the year.
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