Another month of the pandemic in the nation, another unsatisfactory nonfarm payrolls data report. The businesses in the country added fewer jobs than predicted last month. This shows that the promised recovery is yet to get a firm footing. The nation got only 194,000 nonfarm payrolls the previous month, the Bureau of Labor Statistics revealed. It was way short of the half a million nonfarm payroll estimate from experts surveyed. At the same time, the job increase of August was modified to 366,000 from 235,000 payrolls. The nonfarm payroll data shows that hiring has failed again in the previous month. The nonfarm payroll data shows more than eight consecutive months of job additions. But it also shows a slowdown from the slight increase seen in August.
The decrease in the jobless rate comes as the labor force involvement rate gets lower. This means that more citizens who were side-lined due to the pandemic have come back to the workforce. Another figure that also includes discouraged workers and people with part-time jobs decreased to 8.5%. This is also the lowest in the pandemic era. Nick Bunker, economic research director at Indeed, said, "This is quite a deflating report. This year has been one of the false dawns for the labor market. Demand for workers is strong, and millions of people want to return to work, but employment growth has yet to find its footing."
But the markets did not react much to the news. The Dow futures remained sideways for the morning, and Federal Government bonds gave mixed results as investors accepted an average report. The household survey was utilized as the platform for the unemployment rate. It shows much better figures than the nonfarm payroll numbers. The number of unemployed citizens decreased by a robust 710,000. This left nearly 7.7 million workers unemployed by the period the Government's survey period finished last month. In that survey, employment increased by 526,000. This led to a greater than expected decrease in the unemployment rate from 5.2% to 4.8%. This easily defeated the median forecast of a 5.1% rate.
Another promising sign was that the average hourly wage grew by nearly 20 cents or 0.6% to $30.85 from August to September. This defeated the average prediction of a gain of 0.4%. The average wage has taken more credence in recent times as businesses are struggling to employ workers due to the unusual labor shortage. Some businesses have waited for more citizens to rejoin the workforce. But others have increased pay to get workers and fill the necessary openings. Overall, the nonfarm payrolls report shows that the labor market is moving slowly towards a complete recovery amidst the peak wave of the Delta variant of the coronavirus.
The daily case counts got to a record high in early September and then decreased through the second part of the month. Since the survey period of the job report finished halfway through the month, it could not factor in the weeks when the cases began to decrease. If the decrease in new cases continues, this month's nonfarm payrolls job gains could be even higher. This is because the speed of recovery has closely run parallel to the spread of the coronavirus. The Delta wave is broadly seen to have impacted job growth in August as several economic restrictions were put back in place, and the citizens lost hope of a swift recovery. According to the University of Michigan's Surveys of Consumers, the consumer sentiment got better only a little the previous month.
The wages grew dramatically despite the weak job position overall. The available workforce decreased by 183,000 the previous month and 3.1 million short of where it was one and a half years ago, just ahead of the declaration of the coronavirus pandemic. Andrew Hunter, the senior economist at Capital Economics, said, "Labor shortages are continuing to put severe upward pressure on wages ... at a time when the return of low-wage leisure and hospitality workers should be depressing the average."
The Nonfarm Payrolls report comes at a crucial time
The nonfarm payrolls report has come at a very crucial time for the economy. The nonfarm payrolls data shows that there is robust consumer spending despite the increase in housing prices, the growth in the service and manufacturing sector, and the rising costs. Officials in the Federal Reserve are keeping a close watch on the nonfarm payroll data. The central bank has indicated that it is prepared to start ending some of the extraordinary assistance it had given during the coronavirus pandemic. This is because inflation has gone past the goal of 2%.
But, the officials have said that they look at the job market as still quite short of full employment. This is a prerequisite for the increase in interest rates. The market pricing presently shows that the first-rate growth is going to come late next year. Seema Shah, the strategist at Principal Global Investors, said, "After looking like almost a done deal, today's jobs number has thrown expectations for tapering into disarray. The Fed does not seem to need much to convince it that tapering should begin imminently. However, at just 194,000, jobs numbers are suggesting that the labor market is further from hitting the important progress goal than they expected."
The bigger picture of Delta-era hiring
The nonfarm payroll report shows insights beyond the wide job growth and the jobless rate. It shows where hiring grew, which sectors lagged, whether more people were getting in the workforce, and how the coronavirus pandemic continues to cause turmoil in the labor market. The hospitality and leisure sector added the highest jobs throughout the month. There was an addition of 74,000 nonfarm payrolls. That sector had represented much of the hiring comeback in the summer and spring before greatly slowing down to a trickle in August. The local government education system lost 144,200 jobs, according to the nonfarm payrolls data. This made it the largest loser of the month.
But the Bureau of Labor Statistics said that this is a little extraordinary. The algorithm used to modify seasonal patterns in layoffs and hiring expects a large surge in hiring when the school year starts. But the difficulties of hybrid and remote learning over the past couple of years have disrupted those usual patterns and caused chaos this year. The public school sector added more than half a million jobs on a non-seasonally adjusted basis. But this is less than the seasonal adjustment predicted. The U-6 unemployment rate decreased from 8.8% to 8.5%. The labor-force participation rate got a little less, from 61.7% to 61.6% in August. This shows that some citizens have stopped seeking work throughout the month.
The previous months saw the Federal Government's aid to unemployment insurance end across the whole nation. More than 25 states finished the federal benefits ahead of time. This left recipients with less aid when the Delta variant of the coronavirus hit. The aid finished in early September, and filings for UI aid have been elevated since then. This shows that the end of the aid did not boost the increase in the nation's total workforce. Daniel Zhao, an economist at Glassdoor, said, "The labor market recovery continues to hit the brakes this month but is far from completely stopping. Despite the soft September report, there is still a cause for optimism in the coming months, as we are beginning to look in the rearview mirror. The peak of the Delta wave's repercussions is behind us."
The nonfarm payroll data shows that the US economy developed jobs at a slower pace than predicted in September. This is not a good sign about the health of the economy. The nonfarm payrolls were held back because of a drastic decrease in government employment.