September’s Jobs Numbers Were Terrible. Here’s What It Means
With consumer expectations and third-quarter earnings estimates on the decline, September’s jobs data brought more of the same. The US economy added just 194,000 in nonfarm payrolls in September, compared with 366,000 in August, coming in less than half of the […]
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key takeaways
- The US nonfarm payroll report showed 194,000 jobs were added, less than half of expectations
- Economists say we are in a recession, according to consumer sentiment data
With consumer expectations and third-quarter earnings estimates on the decline, September’s jobs data brought more of the same.
The US economy added just 194,000 in nonfarm payrolls in September, compared with 366,000 in August, coming in less than half of the Dow Jones estimate of 500,000, the Labor Department reported Friday.
September’s unemployment rate came in at 4.8%, a decline from August’s 5.2%. Wages increased despite the jobs numbers, the average hourly earnings year-over-year in September increased 4.6%, compared with 4% in August.
Friday’s report also included revision data, which increased previous months’ reports. August’s disappointing numbers were revised up by more than 100,000 to 366,000 from the initially reported 235,000.
“It actually was better than it appeared, to be honest,” said Tom Essaye, founder of Sevens Report Research. “If you look at the revisions for August, the revisions were pretty positive.”
Leisure and hospitality once again led to jobs gains, adding 74,000 positions to the sector. Transportation and warehousing, construction, and manufacturing also saw high gains.
The education sector saw the largest decline in terms of job growth. Local government education employment decreased by 144,000 in September and state government education positions declined by 17,000. Experts are largely attributing the decline to covid-related issues and do not expect the trend to continue.
“That’s sort of a weird anomaly, that’s not something that people think is structurally going to continue,” Essaye said. “I don’t want to say it’s a good number, certainly we would have liked something much higher, but it’s not quite as bad as sort of was made out to be when the number first came out.”
New research released Thursday from David Blanchflower of Dartmouth College and Alex Bryson of University College London suggests that even with revisions and increases in wages, America is still likely in a recession. The two economists point to consumer expectations indexes from the Conference Board and University of Michigan, both of which revealed declining sentiment in recent months, as a key indicator of American economic downturns.
“These surveys are much more important than anything macro forecasters are doing,” said Blanchard of the two reports.
The Conference Board consumer confidence index declined for a third straight month in September. University of Michigan’s preliminary consumer sentiment index inched slightly higher in September but remained near a decade low.
“However, downward movements in consumer expectations in the last six months suggest the economy in the United States is entering recession now,” Blanchflower and Bryson said in the report.
Regardless of the disappointing data, Essaye remains confident that we should expect to see some sort of tapering from the Federal Reserve before the end of the year.
“I think definitely the Fed will taper by the end of the year,” he said. “In order for the Fed not to taper, I think that the data would have to turn down really hard.”