As expected, the pace of job creation slowed again in September, as the economy’s initial surge off the bottom continues to fade. The jobless rate continues its march downward, declining to 7.9% in September — its fifth consecutive monthly drop since peaking at 14.7% in April.
Employers added 661,000 new jobs in September, far below expectations of 850,000. That result wasn’t as bad as it seems on the surface though, as upward revisions to payroll gains in the preceding two months added another 145,000 to the tally. The combined result was an increase of over 800,000 — within striking distance of economists’ expectations.
Private-sector payroll growth was relatively strong, clocking in at a gain of 877,000 versus 1,022,000 in the month prior. That broke clearly with conditions in the public sector, where payrolls declined by 216,000 on steep job losses in state and local education.
While that single-month gain would typically be an outstanding result, the ranks of the employed are still nearly 11 million below the level a year ago, while the number of unemployed is still more than double its September 2019 level. Neither figure accounts for the population of 4 million who have simply left the workforce over that period. In short, there is still much work to be done to return the jobs market to its pre-pandemic condition.
As the economy gradually eases into a more sustainable pace of growth, the pace of job creation should be expected to continue to slow as well, while remaining positive.
Despite the gains, a growing number of job losses are likely to be permanent, as employers shutter their operations. Over time, new businesses will be created and changes in the structure of the economy itself will create new job and growth opportunities, which may require new and different skills, increasing the need for training and skill development for workers unable to return to their prior roles.
The biggest questions surround the risks to the recovery, the greatest of which far and away remains the potential for a resurgence in COVID-19 as the country heads into the traditional cold and flu season. The pace of new cases is rising across much of the country, and with President Trump now testing positive and concerns rise about a more widespread outbreak in senior government officials or the potential impact on the election, attention to the risk of the disease is unlikely to diminish.
From a positive perspective, the death rates associated with the illness have declined as greater clarity has contributed to improved treatment. Americans have also adjusted to the reality of living amid the presence of COVID-19 and adapting their daily lifestyle in response. Even if we experience a surge, it seems unlikely that the behavioral and policy reaction will be as aggressive as it was earlier this year.
For those still impacted by the economic fallout, the most immediate question surrounds the potential for additional support from policymakers in Washington, D.C. who may or may not be moving closer to a deal. Given the proximity to the November election, negotiations are as likely to be motivated by political angling as they are sound policy or economic need.
Ultimately, the jobs picture reflects a similar refrain – one in which significant progress has been made in a short period of time, but also one in which much more is needed to return conditions to the pre-pandemic norm. The easiest part has been done — getting to the finish line will become an increasingly tougher grind from here.
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