Total nonfarm payroll employment increased by 263,000 in September, a smaller increase than the 315,000 jobs added in August, according to the latest jobs report from the Bureau of Labor Statistics (BLS). The unemployment rate ticked down 20 basis points on a month-over-month basis to 3.5%.
“The supply and demand mismatch in the labor market over the past couple years has caused issues in the broader economy, including inflation,” says Zonda chief economist Ali Wolf. “Today’s job report provided a notable sign of relief with the number of job openings down 10% in September and now at the lowest level since early 2020. Additional cooling will be needed, though, to cool the pace of monetary policy.”
In addition to the decline in the unemployment rate, the count of unemployed persons decreased to 5.8 million in September from 6 million.
“Job increases were broad-based across sectors, with service-providing sectors again propelling job growth,” says Doug Duncan, chief economist at Fannie Mae. “Notable gains occurred in education and health services (+90,000 jobs), leisure and hospitality (+83,000), professional and business services (+46,000), and manufacturing (+22,000) sectors.”
The labor force participation rate was little changed at 62.3% in September, and the employment-population ratio was unchanged at 60.1%. Both measures are 110 basis points below their pre-pandemic, February 2020 levels, according to the BLS. The average hourly wage increased 5% on a year-over-year basis to $32.46 in September, though the increase still lags behind headline inflation. Duncan says wage gains likely will further contribute to inflationary pressures in the economy.
The number of long-term unemployed—those jobless for 27 weeks or more—was little changed at 1.1 million in September. The long-term unemployed accounted for 18.5% of all unemployed persons, according to the BLS. Among the unemployed, the number of permanent job losers decreased by 173,000 to 1.2 million in September, while the number of persons on temporary layoff changed little at 758,000.
“Slowed employment gains reflect the ongoing monetary tightening efforts of the Federal Reserve, who raised the federal fund rate 75 basis points in September, further notching up the cost of borrowing,” says Realtor.com economic data analyst Hannah Jones. “The Fed has continued to emphasize its goal of targeting still-high inflation, which was 8.3% in August, in an effort to return prices to a healthy level.”
The number of persons not in the labor force who currently want a job was little changed at 5.8 million in September and remains above its February 2020 level of 5 million. The number of discouraged workers, a subset of the marginally attached who believe that no jobs were available for them, increased by 119,000 to 485,000 in September. Among those not in the labor force in September, 452,000 persons were prevented from looking for work due to the pandemic, according to the BLS.
Residential construction employment, including specialty trade contractors, increased by 6,400 in September. Duncan says continued job growth “likely will be needed to help builders fulfill their current orders.”