(Bloomberg) – US employment figures for September show an economic recovery that is becoming increasingly fragile without a Covid-19 vaccine or new government assistance.
The weaker-than-expected wage bill hike left the U.S. 10.7 million jobs below February’s total, and Friday’s report highlighted other troubling trends: people who lost forever one job hit a seven-year high. Women – and some men too – have left the workforce as school closures have forced parents to stay at home. And long-term unemployment has risen as many Americans have been out of work six months after the pandemic began to cause job losses.
Read more: Women are leaving the labor market at the fastest pace since the peak of the pandemic
The numbers – the last before election day – landed hours after the country was left further in limbo by President Donald Trump’s coronavirus diagnosis. Lawmakers remain at odds over new stimulus measures to help unemployed Americans and small businesses, although the latest figures could add pressure to agree on a package. House Speaker Nancy Pelosi said on Friday she was “optimistic” about a deal being reached.
“The dynamics of the labor market are slowing,” said Michael Gapen, chief US economist at Barclays (LON 🙂 Plc. Now, the recovery of lost production “has to come mainly from the services – it’s going to be difficult when we don’t have a vaccine and there are still a large number of Covid cases.”
The 661,000 increase in the non-farm workforce follows an advance of 1.49 million revised up in August. The median estimate of economists for a gain of 859,000.
While the unemployment rate fell more than expected, from 0.5 percentage point to 7.9%, the participation rate fell 0.3 point to 61.4%, the decline being particularly pronounced among the women.
The participation rate of so-called very working-age women, aged 25 to 54, fell for a third consecutive month, by 0.7 percentage points – the fastest pace since the peak of the pandemic. This figure – which reflects those who are employed, plus the unemployed who are actively looking for work, as a part of the population – indicates that parents are increasingly leaving their jobs because of childcare obligations.
What Bloomberg Economists Say
“At 7.9% in September, the unemployment rate is rapidly approaching the Fed’s forecast for the end of the year (7.6%). However, this is unlikely to be of any comfort to the central bank, given that Americans continue to exit the workforce at an alarming rate.
– Yelena Shulyatyeva, Andrew Husby and Eliza Winger
Learn more for the full reaction note.
“A drop in participation is definitely bad for the labor market outlook,” said Sarah House, senior economist at Wells fargo (NYSE 🙂 & Co. “It has the potential to prolong the overall recovery, as workers are more disengaged from the labor market.”
In addition, weak gains in average hourly earnings – which rose 0.1% less than expected in September from the previous month – are “another mine for consumer spending going forward given overall growth. slow employment ”and declining budget support, she said.
One of the main drivers of the September payroll figures was a seasonally adjusted decline of 280,500 jobs in public and local education, budget cuts as well as the move to virtual education in many districts which affected recruitment. On an unadjusted basis, that number actually increased, albeit much less than normal for back to school.
Failure to adopt additional stimulus measures could also lead to further job cuts in states and local governments.
Federal government employment fell by 34,000 in September, reflecting a drop in the number of temporary census workers during the month, after hiring of those workers boosted 238,000 in August.
The number of Americans classified as long-term unemployed jumped from 781,000 last month to 2.4 million. The category, which includes those who are actively looking for work for 27 weeks or more, highlights the lasting economic legacies that many Americans will have after months of unemployment.
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Industries such as petroleum, entertainment and financial services are all home to large companies that have announced job cuts in recent days, which will take some time to show up in official data.
“Until you can resume normal activity, you’re going to have people unemployed for longer periods of time,” said Brett Ryan, senior US economist at Deutsche Bank AG (NYSE :). “If the companies don’t come back, it’s going to keep the unemployment rate high.”
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