MNI DATA IMPACT: US September Payrolls Misses Expectations

U.S. payrolls growth slowed markedly in September, dipping below 1 million for the first time since the Covid-19 labor market recovery began in May, the Bureau of Labor Statistics reported Friday.

Total nonfarm payrolls grew by 661,000 in September, substantially below market expectations for a 875,000 gain and equating to less than half of August's 1.5 million jobs added.

Nonfarm employment in September was down 10.7 million, or 7%, from February, the BLS said.

Net revisions for the previous two months were a positive 145,000, the BLS said, bringing the three-month average increase to 1.3 million. Just over half of the 22 million jobs lost in March and April have been recovered.

The unemployment rate continued to tumble in September, falling by 0.5 percentage point to 7.9% from 8.4% in August when financial markets had expected a relatively modest decline to 8.2%. The effects of a persistent misclassification error that has skewed unemployment figures since March were minimal in September, and would have inflated the reported unemployment rate by 0.4 percentage point at most, the BLS said.

Still, the duration of unemployment continued to rise, with the median duration of unemployment climbing to 18.2 weeks from 16.2 weeks in August. Policymakers and academics worry that a large number of unemployed Americans will end up long-term unemployed, defined by the BLS as being out of work for upward of 26 weeks, which could lead to scarring in the labor market.

The number of long-term unemployed rose to 2.4 million in September from 1.6 million in August.

The U-6 rate, which accounts for discouraged workers, fell to 12.8% from 14.2% in August, but the number of permanent job losers increased by 345,000 to 3.8 million. That's up 2.5 million since February, the BLS said.

The employment-population ratio rose marginally to 56.6% from 56.5% in August, while the labor force participation rate dipped to 61.4% from 61.7%.

SERVICES GAIN

Government payrolls fell by a larger-than-expected 216,000 in September after climbing by 467,000 in August. That's mainly a reflection of a decline in local and state education payrolls, the BLS said.

Total private payrolls rose 877,000 in September, slightly above expectations for a 875,000 gain. That was driven by gains in service-producing industries like leisure and hospitality (+318,000), and retail trade (+142,000). Employment in health care and social assistance increased 108,000 in September, but was still down 1 million since February, the BLS said.

The length of the average work week grew by one-tenth to 34.7 hours. Average hourly earnings grew by 0.1% in September, below forecasts for a 0.2% gain. From a year earlier, earnings were up 4.7%, mainly due to job losses for lower paid workers.