But if you’re an optimist, there is reason to hope for the future: the surveys behind the job report were closed around mid-September when Covid infections hit a plateau. They have been falling steadily since mid-September, one reason to hope for employment growth in October.
And there was good news in the report, too: the disappointing August report was revised up 131,000 jobs, meaning employers created 366,000 new jobs in the month before last. (Even so, the August report fell far short of analysts’ initial expectations.)
“The weak jobs report should come as no surprise considering that the survey was conducted on Sept. 12 near the peak of the Delta Variation wave,” said Robert Frick, business economist with the Navy Federal Credit Union. “Hundreds of thousands of jobs that could have been added in the leisure and hospitality industries alone have had to wait for coronavirus infections and deaths to decline, as is the case now.”
Daniel Zhao, Senior Economist at Glassdoor, wouldn’t even call the report mixed.
“On the one hand, it shows us how big the impact of the Delta variant really was … but hopefully the September report with the withdrawal of the Delta wave will be the worst,” he told CNN Business.
In late summer, rising Covid-19 infections of the Delta variant kept people at home. Many became wary of spending time in large groups.
Hiring numbers in restaurants and bars have been thin over the past month as customers avoided travel and dining. Recreation and hospitality employers created just 74,000 jobs last month, well below the industry’s average monthly increase of 197,000 this year. The leisure and hospitality industries suffered the worst layoffs related to the pandemic last year.
Another sector that did not do so well in September was education. The number of people employed in municipal education fell by 144,000 and a further 17,000 in state education. Education is a major employer for women, so equality concerns are added as the labor market recovers. Women lost 26,000 jobs last month while men gained jobs.
But there are some seasonal craziness at work, the BLS warned in its report. As the number of new hires, which normally take place in September, was lower this year, the number of jobs declined in seasonally adjusted terms.
“The recent changes in employment are difficult to interpret as pandemic fluctuations in public and private education have distorted normal seasonal hiring and firing patterns,” the BLS said.
We already know this pattern from last year, said Zhao, so it shouldn’t have been a surprise.
“I think many schools are still working with a leaner workforce than they did before the pandemic,” said Zhao.
However, attitudes increased towards the end of the month, according to Frick, who expects this trend to accelerate by October.
What that means for the Fed
This job report was important to the Federal Reserve as well. The central bank announced last month that it was preparing to roll back its huge pandemic stimulus plan by reducing its monthly bond purchases.
During the monetary policy update in September, Fed chair Jerome Powell said he did not need the labor market report as a “knock-out” because he believed the labor market recovery was going well. However, some of his colleagues may still want to see further improvements, Powell said at the time.
While the American labor market still hasn’t reached its pre-pandemic strength, it has made up a lot of ground. Companies are having a hard time finding staff, which is driving up wages. The average hourly wage rose 4.6% in the twelve months ended September, the largest increase since February.
It remains to be seen whether the job growth on Friday will be enough to satisfy policy makers. The Fed will not meet in October. The next central bank meeting will take place in early November and its monetary policy decision is due to be announced on November 3rd.