The United States economy fell well short of economists’ expectations for growth in September, adding just 194,000 jobs, according to the Labor Department’s jobs report on Friday. Despite the low job numbers, the unemployment rate did drop to 4.8% from 5.2%.
The Dow Jones estimated a gain of 500,000 jobs for the month and one of the key causes for a lower-than-expected report was a sharp drop in government employment, which saw a decline of 123,000 jobs, while private payrolls increased by 317,000.
The report also revealed that the labor force participation rate edged lower, meaning more people who were sidelined during the coronavirus pandemic have returned to the workforce. An additional measure, which includes so-called discouraged workers and those holding part-time jobs for economic reasons, declined to 8.5%, also a pandemic-era low.
“This morning’s jobs report was disappointing but not necessarily surprising, given COVID-19 case counts were peaking in mid-September,” said Jay Denton, chief labor-market analyst at ThinkWhy. “Looking forward, the real challenge is the labor force is not rebounding fast enough. The unemployment rate of 4.8% is not a good sign, because more than 3 million people remain out of the labor force.
“On a positive note, the arts, entertainment and recreation sector added 43,000 jobs in September as people have returned to some sense of normalcy, venturing out to sporting events and concerts.”
While job growth remains stagnant relative to projections, which economists credit to a variety of reasons, wages continue to move upward. The monthly gain of 0.6% pushed the year-over-year rise to 4.6% as companies continue to use pay increases to combat the persistent labor shortage.
This labor shortage, combined with dissatisfaction about flexible work arrangements or COVID policies, has led to extreme employee movement, necessitating the increase in compensation. Counteroffers have become a common practice during this time, which also could be forcing upward wages.
Leisure and hospitality again led job creation, adding 74,000 positions, as the unemployment rate for the sector plunged to 7.7% from 9.1%. Professional and business services contributed 60,000 while retail increased by 56,000.
Job gains were spread across a variety of 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).