US Unemployment Rate Unexpectedly Plunges Below 8% As 661K Jobs Added

US Unemployment Rate Unexpectedly Plunges Below 8% As 661K Jobs Added

Tyler Durden

Fri, 10/02/2020 – 08:36

In a repeat of last month when the monthly payrolls came in as expected but the unemployment rate dropped far more than expected, moments ago the BLS report that in September a total of 661K jobs were added, below the 868K expected, and less than half the 1.489MM in August…

… while the Household survey showed an even weaker growth, as the ranks of employed workers rose by just 275K to 147.563MM…

… but offsetting these disappointment was the plunge in the unemployment rate which tumbled by a whopping 50bps from 8.4% to 7.9%, with rates for both blacks and Hispanic plunging as well.

The change in total nonfarm payroll employment for July was revised up by 27,000, from +1,734,000 to +1,761,000, and the change for August was revised up by 118,000, from +1,371,000 to +1,489,000. With these revisions, employment in July and August combined was 145,000 more than previously reported.

The one series tracked by all, the number of “temporarily” unemployed surprised as it dropped by more than 1.5 million to just 4.6 million, from 6.2 million the month before. As usual, debate over what defines “temporary” unemployment remains in the foreground.

This was offset by the number of people in the U.S. seeing permanent job losses, which rose by 340K to 3.756 million, the highest level since 2013, and points to the ongoing business closures, bankruptcies, and investment cuts across the country.

Meanwhile, the number of workers unemployed for more than 15 weeks posted an unexpected reversal, declining by 800K to 7.323MM.

The average hourly earnings also printed generally in line, rising by 4.7% in September, up from the 4.6% revised in August, but below the 4.8% expected.

The labor force participation rate dropped modestly, from 61.9 to 61.4 as the Civilian Labor Force dropped by nearly 700,000 to 160.1 million in September while the population rose by just 200K to 260.742MM.

Despite the overall improvement, let’s not forget that In September, nonfarm employment was below its February level by more than 10.7 or 7% million. Looking at the sector breakdown, job gains occurred in leisure and hospitality, in retail trade, in health care and social assistance, and in professional and business services. Employment declined in government, mainly in state and local government education.

Some more details:

  • Employment in leisure and hospitality increased by 318,000 in September, with almost two-thirds of the gain occurring in food services and drinking places (+200,000).  Amusements, gambling, and recreation (+69,000) and  accommodation (+51,000) also added jobs in September.
  • Retail trade added 142,000 jobs over the month, with gains widespread in the industry. Clothing and clothing accessories stores (+40,000) accounted for about one-fourth of the over-the-month change in retail trade. Notable employment increases also occurred in general merchandise stores (+20,000), motor vehicle and parts dealers (+16,000), and health and personal care stores (+16,000).
  • Employment in health care and social assistance rose by 108,000 in September but is down by 1.0 million since February. Health care added 53,000 jobs in September, with continued growth in offices of physicians (+18,000), home health care services (+16,000), and offices of other health practitioners (+14,000). Social assistance added 55,000 jobs, mostly in individual and family services (+32,000) and in child day care services (+18,000).
  • Professional and business services added 89,000 jobs in September. Employment increased in services to buildings and dwellings (+22,000), architectural and engineering services (+13,000), and computer systems design and related services (+12,000).
  • Employment in transportation and warehousing rose by 74,000 in September. Within the industry, job gains continued in warehousing and storage (+32,000), transit and ground passenger transportation (+21,000), and couriers and messengers (+10,000).
  • Manufacturing added 66,000 jobs over the month. Durable goods accounted for about two- thirds of the gain, led by motor vehicles and parts (+14,000) and machinery (+14,000).
  • Financial activities added 37,000 jobs in September. Job growth occurred in real estate and rental and leasing (+20,000) and in finance and insurance (+16,000). Employment in financial activities is 162,000 below the level in February.
  • In September, the other services industry added 36,000 jobs, largely in membership associations and organizations (+31,000). Employment in other services is 495,000 lower than in February.
  • Employment in information grew by 27,000 in September but is down by 276,000 since February. Motion picture and sound recording industries accounted for most of the September gain (+23,000).
  • Construction employment increased by 26,000 in September, with growth in residential specialty trade contractors (+16,000) and construction of buildings (+12,000). 
  • In September, wholesale trade added 19,000 jobs, with gains in both the durable and nondurable goods components (+13,000 and +8,000, respectively).
  • Government employment declined by 216,000 in September. Employment in local government education and state government education fell by 231,000 and 49,000, respectively. A decrease of 34,000 in federal government was driven by a decline in the number of temporary Census 2020 workers. Partially offsetting these declines, employment in local government, excluding education, rose by 96,000.
  • Employment in private education decreased by 69,000 in September, after a gain of similar magnitude in August. 
  • Employment changed little in mining in September (+1,000). Employment in the industry is down by 133,000 since a recent peak in January 2019; about three-fourths of this decline has occurred since February of this year.

 

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Author: Tyler Durden

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