The numbers: The U.S. created 661,000 new jobs in September and the unemployment rate fell again to 7.9% to the lowest level of the pandemic, but the gain in hiring was the smallest since the economy reopened and pointed to deceleration in the recovery.
The increase in employment last month fell short of Wall Street’s estimate. Economists polled by MarketWatch had forecast an 800,000 gain.
U.S. stocks fell in premarket trading. President Trump has tested positive for the coronavirus was already weighing on the market before the jobs report.
Private-sector hiring was somewhat stronger with 877,000 new jobs created, the Bureau of Labor Statistics said Friday. What dragged down employment in September was a decline in public-educations jobs at local schools and state colleges. Most have adopted forms of online learning.
The unemployment rate, meanwhile, fell for the fifth month in row to 7.9% from 8.4%, a new pandemic low. The official jobless rate had peaked at 14.7% in April before subsiding.
The decline partly reflected an increase in hiring, but more worrisome, nearly 700,000 people exited the labor force and stopped looking for work because job were scarce. They aren’t counted in the unemployment rate.
Another caveat: The jobless rate would have been closer to 8.3% if households gave an accurate description of their employment status, the Bureau of Labor Statistics said.
Some survey respondents have mistakenly referred to themselves as employed even though they aren’t actually working, a problem that’s bedeviled the BLS amid widespread furloughs .
What happened: Bars and restaurants added the most jobs in September (200,000), followed by retail, health care and white-collar businesses.
Workers also put in more hours on the job, another good sign for the labor market.
The increase in employment in August was raised by 145,000 to 1.49 million) The increase in July was revised up slightly to 1.76 million.
So far the U.S. has recovered about 11.4 million jobs since a recovery got underway in May. The economy had shed about 23 million jobs at the height of the pandemic.
Just how many people are still out of work, however, is hard to know for sure.
The monthly employment survey showed 12.6 million people were unemployed last month, but a separate government report suggests as many 26 million are collecting jobless benefits. Some economists contend the data on benefits is inflated by duplicate applications, fraud and other errors.
A broader measure of unemployment known as the U6 suggests the “real” rate fell to 12.8% in September from 14.2%. The U6 rate includes workers who can only find part-time work and those who have become too discouraged to look for jobs because so few are available.
Economists are divided over what comes next.
One camp predicts the economy will slow even further because of the end of most federal aid, the ongoing pandemic and the coming cold season, when viruses like the coronavirus typically flourish.
They point to recent layoff announcements by Disney
and other large service-oriented companies as evidence that another wave of layoffs is building that will halt the momentum in hiring.
Yet other economists contend the economy will continue to expand as workers, consumers and businesses find ways to cope with the virus and governments loosen restrictions.
Consumer confidence rose sharply in September to the highest level during the pandemic, for example, and a variety of survey suggest that manufacturers, small businesses and other firms are steadily expanding.
What they are saying? “This underscores that job gains from here on will be tougher, and speaks to the need for more stimulus to help the economy and to support the more than 11 million Americans who had jobs in February and who are unemployed now,” said Robert Frick, corporate economist at Navy Federal Credit Union.