Lukewarm Jobs Report Obscures Promising U.S. Trends

By Matt Brienen

Published: 2021-10-08T17:55:29+00:00

Source: Reuters

Americans are getting back to work after the coronavirus recession, even if it isn't happening as quickly as it might. Payrolls grew by 194,000 in September, well below the 500,000 forecast of economists polled by Reuters. But the unemployment rate, measured in a different survey, fell sharply to 4.8% read more . The Federal Reserve won't be rushing to cool the economy, but there's no call for alarm either.

Underlying the disappointing headline September jobs number are some positive trends. The employment-to-population ratio rose slightly to 58.7% while job-creation figures were revised upward for July and August, the Labor Department said on Friday. Average monthly gains this year are running at a healthy 560,000 or so.

In one area watched closely by Fed Chair Jerome Powell and his colleagues, the unemployment rate for Black Americans fell almost 1 percentage point to 7.9% read more , which is still high but reverses an upward trend from August. Meanwhile the number of long-term unemployed fell significantly.

As is almost the norm following the unprecedented impact of the pandemic, there were quirks in the data, too. The usual back-to-school hiring didn't happen in September read more . Jobs in various government and private education sectors fell by 180,000 in the seasonally adjusted figures and recruitment was lower than in typical years, according to the Labor Department's commentary.

The Fed's next policy meeting comes in November . The central bank could start reducing its pandemic-fighting $120 billion in monthly bond purchases by the end of this year, even if interest-rate increases are some way off. The latest employment report may not change Powell's view on that much.

But the daily average number of new Covid-19 cases is down to around 95,000 compared with more than 160,000 in September, according to the Centers for Disease Control and Prevention. The Senate also helped the outlook on Thursday by passing a temporary resolution to the impasse over increasing the federal debt limit, postponing any risk of the government defaulting on its debt obligations. With some of the headwinds declining in force, the steady recovery could accelerate again.