September Jobs Cool

Key Takeaways

• The economy added just 29,000 jobs in September well below expectations. 

•  Healthcare continued to lead job creation with 17,000 new positions, while construction added 11,000 and manufacturing added 9,000.

• Wage growth slowed as hourly wages were up just 5 cents for the month and 3% annually. 

• 7.1August JOLTS report shows a healthy demand for talent with 7.1mm open jobs, but employers remain sluggish in filling them.   

  
  

September’s jobs report points to a labor market that is cooling rather than collapsing. The U.S. added just 29,000 jobs in September, well below expectations, while the unemployment rate edged up to 4.2%. July and August were also revised down by a combined 60,000 jobs. At the same time, information, financial activities, professional and business services, and government all posted declines. Wage growth also moderated, with average hourly earnings up just 3.0% over the past year. Overall, the report reinforces the idea of a “low-hire, low-fire” labor market: employers aren't aggressively laying people off, but they are becoming much more cautious about adding headcount.

For the staffing industry, one number deserves particular attention: temporary help services fell by 10,900 jobs in September, the first monthly decline after nine consecutive months of growth. That is a change worth watching, but I would not view one month's decline as a trend yet. The drop occurred as professional and business services employment declined by 9,000 overall.  BLS does not identify a specific cause for the temporary-help decline, so it would be speculation to attribute it to one factor. The broader picture is that companies appear hesitant to commit to permanent hires.  For staffing companies, that makes new business development, client diversification and staying close to existing customers especially important heading into the fourth quarter.

August JOLTS showed continued labor-market caution. The September 29 JOLTS report showed 7.1 million job openings in August, essentially unchanged from July, while hires were 5.2 million, quits were 3.1 million and layoffs/discharges were 1.6 million. The key takeaway is that demand for workers remains substantial, but employers are not aggressively hiring.

For a deeper dive….

·       A more encompassing measure of unemployment (U6) that includes discouraged workers and those holding part-time jobs for economic fell .1% to 7.6%.

·       Prime age labor force participation rate (ages 25-54) was up .4% to 83.7%.

·       The overall labor force participation increased by .2% to 61.8%.  This is 1.4% below the level of February 2020.

·       In September, average hourly earnings for all employees on private nonfarm payrolls edged up by 5 cents, or 0.1 percent, to $37.81. Over the past 12 months, average hourly earnings have increased by 3.0 percent. In September, average hourly earnings of private-sector production and nonsupervisory employees rose by 7 cents, or 0.2 percent, to $32.60.

·       The average workweek for all employees on private nonfarm payrolls remained at 34.4 hours in September. In manufacturing, the average workweek was unchanged at 40.6 hours, and overtime held at 3.0 hours. The average workweek for production and nonsupervisory employees on private nonfarm payrolls remained at 33.8 hours.

·       APD reported that 90,000 jobs were added in September, above expectations.