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U.S. Labor Market Posts Worst Month This Year As 7.7 Million Americans Remain Unemployed

Topline

The United States added back a fewer-than-expected 194,000 jobs in September, according to data released Friday by the Labor Department—marking a second-straight monthly decline and the labor market’s worst monthly showing since December, as experts worry the pandemic’s resurgence has slowed the economic recovery.

Key Facts

September’s job additions were much lower than the 500,000 new jobs economists were expecting, according to Bloomberg data, and fell from

Despite the disappointing job gains, the number of unemployed people in the United States fell from 8.4 million in August to about 7.7 million, which is still markedly higher than 5 million in February 2020, the government said.

The unemployment rate of 4.8% fell from 5.2% in August, hitting its lowest point in more than a year but well above pre-pandemic levels of about 3.5%.

In a morning note, Jason Pride, chief investment officer at wealth advisory Glenmede, pointed to upward revisions in the number of jobs added in August and July (totaling about 169,000) for the 0.4% drop in the unemployment rate, which now sits below 5% for the first time since March of last year.

Notable job gains occurred in leisure, hospitality, retail and transportation, the government said, while employment in public education declined on a monthly basis.

Overall, the U.S. economy has added back roughly 17 million of the 22 million jobs lost when pandemic-induced shutdowns first forced companies to curb in-person business in March and April of last year.

Key Background

Despite a promising unemployment report on Thursday, a number of data points in recent weeks have pointed to ongoing struggles around employment. After adding more than 1 million jobs in July, the labor market gained just 366,000 jobs in August—sharply lower than forecasts calling for nearly a million additions. “The delta variant of Covid-19 appears to have dented the job market recovery,” Mark Zandi, the chief economist of Moody’s Analytics, said of the lackluster employment readings, echoing experts concerned the pandemic’s resurgence has slowed down the economic recovery. New unemployment claims also clocked in higher than expected for three weeks in September.

What We Don’t Know

In a morning note, Jamie Cox, a managing partner at Richmond, Virginia-based Harris Financial Group, said the disappointing jobs number could call into question whether the Federal Reserve begins tapering, or reducing, its economic stimulus measures by the end of this year, as it indicated last month. “There are lots of positives in the report, like an uptick in average hourly earnings, but not enough to sugarcoat the fact the employment picture remains murky with all the covid-related cross currents,” Cox said.

Surprising Fact

The unemployment rate hit a record high of 14.7% at the height of pandemic uncertainty in April 2020.

Further Reading

Unemployment Claims Finally Fall After A Month—But 4.2 Million Americans Still Receive Benefits (Forbes)

U.S. Added 235,000 Jobs In August—Revealing ‘Major’ Labor Market Slowdown As Delta Variant Threatens Economic Recovery (Forbes)

Here’s Why Up To 6 Million Americans Who Lost Covid Unemployment Benefits Likely Won’t Return To Work This Year (Forbes)

This is a developing story. Please check back for updates.

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