September Jobs Report Shows Labor Market Treads Water Pre-Shutdown Disruption
September Jobs Report Shows Labor Market Treads Water Pre-Shutdown Disruption
The labor market continued to chug along in September, adding 119,000 jobs to the economy. This marks the highest level since April of this year, possibly signaling a turning point toward faster growth. However, July and August both saw downward revisions, with August now reflecting negative job growth (-4,000), dampening the impact of September's relatively stronger numbers. And with the government shutdown possibly impacting October business activity and eliminating the October Jobs Report entirely, it is too soon to tell what the next step for the labor market will hold.
The unemployment rate ticked up to 4.4%, largely in line with expectations but notably higher than the 4.1% rate from a year ago. The number of unemployed Americans now stands at 7.6 million, up from 6.9 million last September. While the labor force participation rate held steady at 62.4%, the employment-population ratio continues its year-over-year decline, down 0.4 percentage points as demographic shifts and continued retirements among older workers reshape the labor force.
Long-term unemployment remains elevated, with 1.8 million Americans out of work for 27 weeks or more—representing nearly a quarter of all unemployed workers. This persistent challenge underscores the difficulty job seekers face in today's market, even as some sectors show pockets of strength. Before the data delays from the shutdown, there were more unemployed people than there were job openings, underscoring the challenge for currently unemployed workers to find a role in this low-hire environment.
Healthcare employment rebounded from August's surprising dip, adding 43,000 jobs—right in line with the sector's 12-month average of 42,000. Food services and drinking places added 37,000 jobs as consumer sentiment remained strong, while social assistance continued its upward trend with 14,000 new positions.
However, these gains were partially offset by losses in transportation and warehousing (-25,000) and federal government employment, which declined by 3,000 in September and has shed 97,000 jobs since peaking in January—a trend reflecting ongoing government workforce adjustments. Coming off the record-breaking shutdown, it is likely that quits, which are up more in federal government than any other industry, will continue to rise in the federal sector, impacting even more jobs in the months to come.
Average hourly earnings rose 3.8% over the past year, continuing to outpace inflation and providing some relief to workers navigating an uncertain economic landscape. The average workweek remained steady at 34.2 hours.
A note on data quality: This report comes with an unusual caveat—publication was delayed more than six weeks due to a federal government shutdown, and October data will not be published at all. The disruption means we won't have a complete picture of fall labor market trends until the November report arrives in mid-December.
As hiring remains tepid and job growth hovers near stall speed, the labor market appears stuck in a holding pattern. Whether this represents a temporary soft patch or the beginning of a more serious slowdown remains to be seen. The trend of consistent negative revisions raise concerns, but September's stronger headline number and resilient wage growth leave room for optimism that the labor market may stabilize or even rebound in the months ahead.