Employers added 194,000 in the month of September, way below economists’ expectations.
Temporary help lost 5,200 jobs in September.
The number of quits increased in August to 4.3 million (+242,000). The quits rate increased to a series high of 2.9 percent. Quits increased in accommodation and food services (+157,000); wholesale trade (+26,000); and state and local government education (+25,000).
Analysis of the September Employment Report
As stated, employers added 194,000 in the month of September, way below economists’ expectations.
At first glance, this seems like a very disappointing report. The top line number fell short of the 500,000 new jobs economists expected. Labor participation rates fell, which is also disappointing at this stage of the recovery.
But there were a few positives.
Government hiring was down as education services for example hired less staff than expected. That caused a drag on the top line number. The private sector performed better and is reflected in the ADP number (+568,000).
The earnings increase of 4.6% year-over-year is impressive, given that the Leisure and Hospitality jobs increase usually depresses earnings growth. Higher earnings may motivate people back into the workforce.
The other surprise everyone seems to be talking about is the end of extended UI benefits did not cause a huge influx of job seekers. There could be a couple of reasons for it.
The cutoff date for the report was September 15th. Given the Labor Day weekend, job seekers may not have reentered the job market until later in September.
Here are the highlights:
· A more encompassing measure of unemployment (U6) that includes discouraged workers and those holding part-time jobs for economic reasons dropped to 8.5% from 8.8% in August.
· The change in total nonfarm payroll employment for July was revised up by 38,000, from +1,053,000 to +1,091,000, and the change for August was revised up by 131,000, from +235,000 to +366,000. With these revisions, employment in July and August combined is 169,000 higher than previously reported. (Monthly revisions result from additional reports received from businesses and government agencies since the last published estimates and from the recalculation of seasonal factors.)
· Prime age labor force participation rate (ages 25-54) was down this month at 81.6%. This number has been stagnant for a number of months and is still down by 1.3% since February 2020, the last month before the pandemic started.
· The overall labor force participation was down .1% at 61.6%. This is 1.7% below last February (2020) level.
· Average hourly earnings for all employees on private nonfarm payrolls rose by 19 cents to $30.85 in September, following large increases in the prior 5 months. In September, average hourly earnings of private-sector production and nonsupervisory employees rose by 14 cents to $26.15. The data for recent months suggest that the rising demand for labor associated with the recovery from the pandemic may have put upward pressure on wages. However, because average hourly earnings vary widely across industries, the large employment fluctuations since February 2020 complicate the analysis of recent trends in average hourly earnings.
· Average hourly earnings are up 4.6% from the same period a year ago, this reinforces that demand for labor is very strong.
· In September, the average workweek for all employees on private nonfarm payrolls increased by 0.2 hour to 34.8 hours. In manufacturing, the average workweek was unchanged at 40.4 hours, and overtime edged up by 0.1 hour to 3.3 hours. The average workweek for production and nonsupervisory employees on private nonfarm payrolls increased by 0.1 hour to 34.2 hours.
· APD reported that 568,000 jobs were created in August
JOLTS Report October 12, 2021
Job Openings
· On the last business day of August, the number and rate of job openings decreased to 10.4 million (-659,000) and 6.6 percent, respectively. Job openings decreased in several industries with the largest decreases in health care and social assistance (-224,000); accommodation and food services (-178,000); and state and local government education (-124,000). Job openings increased in federal government (+22,000). The number of job openings decreased in the Northeast and Midwest regions.
Hires
· In August, the number and rate of hires decreased to 6.3 million (-439,000) and 4.3 percent, respectively. Hires decreased in accommodation and food services (-240,000) and in state and local government education (-160,000). The number of hires decreased in the Midwest region
Separations
· Total separations include quits, layoffs and discharges, and other separations. Quits are generally voluntary separations initiated by the employee. Therefore, the quits rate can serve as a measure of workers’ willingness or ability to leave jobs. Layoffs and discharges are involuntary separations initiated by the employer. Other separations includes separations due to retirement, death, disability, and transfers to other locations of the same firm.
· In August, the number and rate of total separations were little changed at 6.0 million and 4.1 percent, respectively. The total separations level increased in accommodation and food services (+203,000) and in state and local government education (+57,000). The total separations level decreased in other services (-68,000) and in state and local government, excluding education (-26,000). Total separations were little changed in all four regions.
· The number of quits increased in August to 4.3 million (+242,000). The quits rate increased to a series high of 2.9 percent. Quits increased in accommodation and food services (+157,000); wholesale trade (+26,000); and state and local government education (+25,000). Quits decreased in real estate and rental and leasing (-23,000). The number of quits increased in the South and Midwest regions.
· In August, the number and rate of layoffs and discharges were little changed at 1.3 million and 0.9 percent, respectively. Layoffs and discharges decreased in other services (-61,000) and in state and local government, excluding education (-22,000). Layoffs and discharges increased in state and local government education (+19,000). Layoffs and discharges were little changed in all four regions.
· The number of other separations edged up in August to 390,000 (+49,000). Other separations increased in several industries with the largest increases in state and local government education (+13,000); information (+11,000); and durable goods manufacturing (+8,000). The other separations level increased in the West region.
Net Change in Employment
· Over the 12 months ending in August 2021, hires totaled 72.6 million and separations totaled 66.7 million, yielding a net employment gain of 5.9 million. These totals include workers who may have been hired and separated more than once during the year.
Source: ADP, BLS, Wall Street Journal
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