Each month, the U.S. Bureau of Labor Statistics releases the “Employment Situation,” a rather jazzy title for the monthly jobs report detailing such data as the nation’s employment rate, number of job openings and those seeking work, increase in earnings and other fun workforce facts.
The September 2021 jobs report hit the Internet earlier this month, and the response was … underwhelming. However, if you break it down, the unimpressive lack of new jobs belies a few causes for economic encouragement. Here, we’ll take a look at some of the upsides from the latest data.
The Unemployment Rate Doesn’t Lie
Economists and cable news pundits tend to focus on one overarching data point when analyzing the monthly employment report: jobs growth. We all heard the collective groan when September’s report was released: only 194,000 new jobs added, indicating the weakest growth this year. That’s down from 366,000 new jobs in August and more than 1 million in July. The Dow Jones had estimated a spike of 500,000 new jobs last month.
But if we dig deeper into the data, we are able to find a silver lining. The unemployment rate fell sharply from 5.2 percent in August to 4.8 percent in September. (Compare this to the historically low 3.5 percent unemployment rate in February 2020, and you can see we still have a ways to go. But at least we’re heading in the right direction.)
Another telling stat: The number of people unemployed dropped by a whopping 710,000 while the number of people working rose by a robust 526,000. The employment-to-population rate rose to 59 percent, its highest level since March 2020. These numbers reflect a sense of optimism as we continue to navigate the “new normal” and people — albeit tentatively — return to the workforce.
The Great Comeback
The U.S. has regained 17 million jobs since the start of the pandemic. But there are still 5 million fewer jobs than in February of last year, signifying we may remain in recovery mode for the unforeseen future.
What industries are leading the way? Perhaps as no surprise, leisure and hospitality again led job creation, adding 74,000 positions, as the unemployment rate for the sector plunged to 7.7 percent from 9.1 percent. Professional and business services contributed 60,000 while retail rebounded by 56,000 after two months of declines.
Job gains were spread across a variety of other sectors: Transportation and warehousing (47,000), information (32,000), social assistance (30,000), manufacturing (26,000), construction (22,000) and wholesale trade (17,000). Construction companies and manufacturers reported strong job growth in September, despite supply-chain difficulties (another ongoing challenge hindering dramatic job growth).
Higher wages were also reported as employers recognized the need to find and keep strong employees in the wake of the Great Resignation of 2021. Make no mistake: This is a job seekers’ market if ever there was one.
The Bigger Picture
The report comes at a critical time for the economy, with recent data showing solid consumer spending despite rising prices, growth in the manufacturing and services sector, and surging housing costs.
Federal Reserve officials are watching the jobs numbers closely. The central bank recently has indicated it’s ready to start pulling back on some of the extraordinary help it has provided during the pandemic crisis, primarily because inflation has met and exceeded the Fed’s 2 percent goal.
However, officials have said they see the jobs market still well short of full employment, a prerequisite for interest rate hikes. Market pricing currently indicates the first rate increase likely will come in November 2022.
Another caveat: The September employment numbers were collected in mid-September when the Delta variant was wreaking havoc on an already precarious situation. Now that Covid cases and hospitalizations are on the decline in much of the country again, October’s “Employment Situation” could be a lot less gloomy. Stay tuned for Nov. 5 when it’s released.
With the recruitment expertise and industry knowledge of the 20/20 Foresight Executive Search team at your side, you’ll be poised for whatever fluctuations the jobs market brings — we’re always here to help you build strong, resilient teams for extraordinary times.