Analysis by Frank Conte
OVERVIEW
- The unemployment rate dropped to 7.9 percent in September with payrolls increasing by 661,000 jobs, according to the Bureau of Labor Statistics.
- The number of unemployed persons fell by 1 million to 12.6 million.
- The Labor Force Participation (LFP) declined in September to 61.4 percent. The Employment-Population ratio changed little at 56.6 but is 4.5 percentage points lower than February 2020 (61.1 percent).
- Despite declines in LFP and Employment-Population in the last five months, both measures are lower than in February.
- The unemployment rates declined among all major worker groups. However, teenagers faced the highest unemployment at 15.9 percent.
- In September, notable job gains took place in the leisure and hospitality, retail trade, health care and social assistance, professional and business services.
- In September, the number of persons who work part time declined by 1.3 million. At 7.2 million, the number of persons not in the labor force remains 2.3 million higher than February.
- Average hourly earnings for private sector workers rang in at $29.47. The average workweek for all employees rose by 0.1 hour to 34.7 hours.
- Reports for the two previous months were revised upward. The payrolls report for August changed by 118,000 from 1.371 million to 1.489 million while the change for July was revised up by 27,000 from 1.734 million to 1.761 million.
- Leisure and hospitality increased by 318,000. Yet employment in the food services and drinking places sector is down 2.3 million since February.
- No sector has turned its employment around since last September. (See Chart A.)
ANALYSIS
The September report will be the last before next month’s elections which may weigh heavily on voters. Although today’s headline number beat Wall Street estimates of 8.6 percent, employment isn’t recovering quick enough.
“The U.S. Jobs Recovery Is Sputtering,” declared the Wall Street Journal that best captures the fading hope of a V-shaped recovery.
The private economy generated 877,000 jobs. In contrast this week’s ADP National Employment survey reported a gain of 749,000 private jobs.
Scattered through today’s report are troubling signs. The number of permanent job losers increased by 345,000 to 3.8 million and according to the BLS, “this measure has rise by 2.5 million since February.” Long-term unemployment showed no improvement.
The long-term jobless (unemployed for more than 27 weeks) increased by 781,000 to 2.4 million.
The number of involuntary part-time workers is 2.0 million higher than the onset of the pandemic in February. September showed a decrease but that’s the result of a cut-back in hours.
“Permanent jobs losses rose by more than 300,000. That’s not a good thing. The labor force participation rate declined, which pulled the overall unemployment rate down. That’s not a good sign, either,” said Kathy Jones, head of fixed income at Charles Schwab told CNBC. “We’re looking at state and local government layoffs, we’re looking at a higher level of permanent job losses and more people leaving the workforce. None of that is good for the long run.”
Indeed a look over the horizon isn’t promising. American Airlines indicated this week that it plans to furlough 19,000 workers. The COVID-19 lockdown has also squeezed the joy of amusement and fun. Disney announced on Wednesday that plans to lay off nearly 28, 000 domestic workers, some of whom have been on furlough since April. The financial sector is also expected to worsen as Allstate revealed it will part ways with 3,800 workers. Government employment offers no rebound — dropping by 216,000. The battered retail sector added jobs but since February it shed 483,000.jobs. Average hourly earnings of private payrolls changed little month over month settling at $29.47, a rise of two cents.
CHART A
CHART B
