September Jobs Report: Job Growth Slows Again, But the Labor Force Stays Elevated
September Jobs Report: Job Growth Slows Again, But the Labor Force Stays Elevated
The September Employment Report missed the mark, with only 29K jobs added and downward revisions to the prior two months. Employers were likely responding to the tighter fiscal environment, as high Treasury yields and a Fed rate hike make borrowing more expensive, thus dampening plans for hiring and expansion in the near term. But workers seem to still see a chance for more opportunities as marginally attached and discouraged worker populations moved back into the official labor force, and the participation rate increased for the second month in a row.
Unemployment ticked up to 4.2%, but given the rise of new entrants and reentrants coming into the labor force, that change does not signal more people losing or voluntarily leaving their existing positions. Turnover remains tight, and slower job growth will continue to challenge long-term unemployment.
Workers are betting on opportunities that employers aren't ready to offer. The longer hiring stays this slow, the longer the wait for those already searching.
Job gains
Healthcare continued to see positive job gains (+17K), but that growth has slowed over the past few months from the prior 12-month average (+33K).
Construction job growth (+10K) was in line with recent trends, despite a slow down in job openings from the latest JOLTS report. Along with a higher-than-expected increase in construction spending this week, the construction labor market seems to remain on stable footing.
Job losses
White-collar industries shed the most jobs in September, with losses in Information (-10K), Professional and Business Services (-9K), and Financial Activities (-7K).
Temporary Help Services lost 11K jobs in September. As the largest decline, this may signal weakening demand for hiring for the coming months. Instead of changing headcount for their permanent workforce, employers often turn to temp services to scale up and down more quickly, to be able to respond to changing economic conditions.
Labor force dynamics
The labor force grew for the second month in a row in September, adding 485K people to the labor force. As such, the participation rate increased to 61.8%. Marginally attached (-236K) and discouraged (-27K) workers both saw their populations fall, and new entrants (+116K) and reentrants (+152K) both saw increases, as more workers moved into the official labor force, possibly rising the high degree of job growth seen in August. It appears that the level of job growth might remain a one-off, at least for the rest of this year, so it is unlikely this boost to labor force participation will stick.
Wages and hours
Wage growth slowed further to 3.0% annually, and hours remained flat. Workers might be expecting that new opportunities will be on the horizon, but those new opportunities don’t appear to be coming with higher pay any time soon. More workers found themselves in part-time positions due to economic conditions, meaning they didn’t land the full-time roles they really want in September. High costs, slow wage growth, and fewer hours all lead to increasing affordability concerns for the base of the US workforce.
The labor market is still fighting to find its footing, and it's unlikely to do so until inflation is under control.
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