September’s Mixed Jobs Report

The September jobs report provided fodder for economic pessimists and optimists. The headline number—194,000 jobs added—fell well short of the Dow Jones estimate of 500,000. Beyond the headline, though, unemployment data was reasonably good, so that the overall employment picture continues to be an economy that, while slowed by the delta variant pandemic, is still posting steady, if modest, gains.

One reason for the poor headline number was seasonality adjustments that may be erroneous in a post-COVID world. Education employment numbers grew by 1.28 million in September with the beginning of the school year, but since 1.46 million workers were expected to be added, the seasonally adjusted number showed a loss of 180,000 jobs for September. The Labor Department noted that the pandemic had caused broad disruptions within the education sector, including distorting the typical seasonal hiring and layoff patterns. 

The unemployment number itself fell from 5.2% to 4.8%, as the household survey showed the number of unemployment falling by 710,000 and the number of workers rising by 526,000. Job gains for July and August were also revised upward by 38,000 and 131,000, respectively. The good news is that unemployment dipped below 5% a mere 17 months after the end of the recession—by comparison, after the 2008 financial crisis, unemployment didn’t fall below 5% until January 2016.

The employment population ratio remains depressed, however, at 81.7 percent for individuals aged 25 to 54, well off the pre-pandemic peak of 83.1 percent. The ending of generous unemployment benefits, blamed by some economists and politicians for worker shortages, did not yield an immediate upturn in jobseekers—the labor force participation rate for all adults actually fell slightly last month. And when there are businesses struggling to hire and workers unwilling or unable to return to the labor force, it is not surprising to see private sector wages increase, as they did by 4.6% in September, as compared to September 2020.

COVID and the delta variant are still the economic elephant in the room. Employment fluctuations, inflation spikes, and supply chain woes are still cascading through the United States and the world. Until we have a better understanding of whatever the “new normal” will be, it is likely best to go beyond a single headline number, and to take a relatively humble and cautious stance in interpreting unfolding economic data. 

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This material is not intended as an offer or solicitation for the purchase or sale of any financial instrument or investment strategy. This material has been prepared for informational purposes only, and is not intended to be or interpreted as a recommendation.  Any forecasts contained herein are for illustrative purposes only and are not to be relied upon as advice.