The US added just 194,000 jobs last month, falling way short of expectations for the second consecutive month even as schools reopened and COVID-19 cases began to fall, the feds said Friday.
September’s numbers fell far short of economists’ expectations of 500,000 jobs added, and comes after the country added a disappointing 366,000 jobs in August, according to revised figures released Friday.
At the same time, the unemployment rate dropped more than expected to 4.8 percent in September from 5.2 percent in the month prior, according to Friday’s highly anticipated jobs report from the Bureau of Labor Statistics.
That’s still far higher than the 50-year low of 3.5 percent reported in February of last year, before the pandemic gutted the economy, but represents steady progress as the labor rebound continues.
Economists surveyed by Dow Jones had expected to see the unemployment rate tick down to 5.1 percent.
The hard-hit leisure and hospitality sector, which has led the jobs recovery this year with gains of 350,000 per month in the first half of the year, added 74,000 jobs after job creation stalled out among bars, restaurants and hotels in August.
Professional and business services created 60,000 new jobs in September, the feds said. Transportation and warehousing added 47,000 new positions while private education lost 19,000.
Notably, manufacturing picked up 26,000 new hires while construction added 22,000 new jobs.
A surge in COVID-19 cases fueled by the highly contagious Delta variant may have kept some hesitant workers on the sidelines late in the summer, economists say. Childcare concerns with schools still out in August likely also kept would-be employees at home.
But with schools back and the surge in COVID cases subsiding, economists expect to see the recovery in the job market march forward this fall — barring another flare up in COVID cases.
Companies appear eager to hire across the board, according to federal data.
There were nearly 11 million unfilled jobs at the end of July, more than ever recorded before, the Labor Department’s data shows, and employers have been complaining that a nationwide labor shortage is holding them back from producing and delivering goods.
The September jobs report is also the first to include data that reflects the end of the federal government’s pandemic-inspired unemployment benefits program, which gave people an extra $300 per week and was blamed for keeping workers on the sidelines as companies scrambled to hire.
Those extra benefits ended in the first week of September, knocking millions off unemployment. Economists will be watching to see if those people replaced income with a job or fell out of the labor force entirely.
While economists and corporate executives have still voiced concern about supply chain disruptions holding back spending and sending prices higher, the overall economic recovery has continued to gain steam after a brief setback in the summer.
“While there are some encouraging signs that the worst may have passed with the Delta variant of COVID-19, which took wind out of the proverbial sails of the economic recovery, supply chain challenges and rising prices persist with no immediate sign of substantial resolution or improvement,” said Mark Hamrick, Bankrate’s senior economic analyst.
“Cargo ships unable to head to West Coast ports, a trucker shortage and lack of sufficient rail capacity are among the complicating factors all conspiring to boost product and component bottlenecks when retailers are very much focused on the holiday shopping season.”
Officials at the Federal Reserve have voiced optimism about the state of the economy and the pace of the labor market’s recovery.
Fed Chairman Jerome Powell said in August that the central bank could begin reversing its easy-money policies as soon as this year, suggesting confidence in the recovery.
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