US Added 263k Jobs in September with Jobless Rate of 3.5% as Participation Rate Falls

US Nonfarm Payrolls in September rose 263,000 rose higher than the expected 250,000 after the prior increase of 315,000. Job gains were led by the leisure and hospitality industry, which added 83,000 jobs. Healthcare employment rose 60,000. Private payroll company ADP reported that US jobs grew 208,000 private payrolls in September (consensus 198,000) while the August increase was revised up to 185,000 from 132,000 based on ADP’s revised methodology.

The Unemployment Rate in September was 3.5% (consensus 3.7%) versus the prior 3.7% reading as the labor force participation rate fell to 62.3% from 62.4%. Average Hourly Earnings rose 0.3% (consensus 0.3%) after August’s 0.3% increase. The Average Workweek was 34.5 (consensus 34.5) after the prior 34.5.

Working

September 2022 US Employment Report

The jobless rate fell to 3.5% in September the Labor Department reported Friday. The unemployment rate fell back to the February 2020 pre-pandemic rate of 3.5%, which was a 50-year low.

US Jobs Report

September 2022 US Employment Report and Expectations

Employment

  • US Nonfarm Payrolls Sep: K (est 250K; prev 315K)
  • US Unemployment Rate Sep: 3.5% (est 3.7%; prev 3.7%)
  • US Labour Force Participation Rate Sep: 62.3% (est 62.4%; prev 62.4%)
  • Prior two-month net revision 11,000 higher than previously reported. The change in total nonfarm payroll employment for July was revised up by 11,000, from +526,000 to +537,000, and the change for August remained at +315,000.
  • US Change in Manufacturing Payrolls Sep: 22K (est 20K; prevR 27K)
  • US Change in Private Payrolls Sep: 288K (est 275K; prevR 275K)
  • US Change in Government Payrolls Aug -25K (prev +40K)
  • U6 underemployment rate 6.7% vs 7.0% prior
  • Long-term unemployed at 1.1m vs (prev 1.1m, 1.2m pre-pandemic)
  • The long-term unemployed accounted for 18.5 percent of all unemployed persons.
  • The employment-population ratio 60.1% vs (prev 60.1%, 61.2% before pandemic)
  • US Average Hourly Earnings (M/M) Sep: 0.3% (est 0.3%; prev 0.3%)
  • US Average Hourly Earnings (Y/Y) Sep: 5.0% (est 5.0%; prev 5.2%)
  • US Average Weekly Hours All Employees Sep: 34.5 (est 34.5; prev 34.5)

The market had expected the September report released Friday to show nonfarm payrolls rose 250k new jobs.  September marks a drop from an average of 439K in the first eight months of the year, as higher interest rates and prices started to weigh on the economy. Private payroll company ADP reported that US jobs grew 208,000 private payrolls in September (consensus 198,000) while the August increase was revised up to 185,000 from 132,000. 

A severe labor shortage has driven up annual wage increases above 5% every month of this year. By contrast, wage gains averaged 3.2% in the 12 months to February 2020. Wage growth eased last month. Average hourly earnings rose by 0.3% in August from a month earlier. They were up 5.2% from a year earlier, nearly the same as in July.

Employers hired across industries. Companies in certain industries that are vulnerable to interest-rate increases, such as technology and real estate, have announced layoffs. Some firms have implemented hiring freezes.

The labor force participation rate, which measures the share of the population working or looking for work rose to 62.4% in August from 62.1% in July. More workers joining the labor force could help sustain job growth in the coming months. Participation was still down from 63.4% in February 2020.

Total nonfarm employment has increased by 22.0 million since hitting a trough in April 2020 and has returned to the pre-pandemic level. Private-sector employment is 629K higher than in February 2020, although several sectors have yet to recover. On the other hand, government employment is still 597K lower than its pre-pandemic level.

Market Reaction

U.S. Interest Rate Futures Priced in a 92% Chance of a 75-bps Fed Rate Hike in Nov, Up From 85.5% Before Sept Jobs Report. That would bring the Fed target rate to 4.5%.

The Nasdaq fell 2.8% in a broadening) equity rout after non-farm payrolls highlighting the sensitive to economic data. The jobs report wasn’t much more than a touch strong, and stocks were wrecked on fear of more Fed hikes. Weekly from 5% to just 1.7%.

Analysts September estimates for Jobs report were:

Goldman Sachs

  • Nonfarm payroll headline below consensus +200K
  • Jobless rate estimate is 3.7

Société Générale

  • We project a 280K gain.
  • The unemployment rate for September is expected to decline to 3.6%
  • The monthly flows are volatile. If there are no returnees, or if there is a net exodus from the labor force rather than re-entrants, the unemployment rate could drop even more than the 3.6% we project.
  • Wages are expected to rise 0.5% MoM in September. We view the shortfall seen in August, when wages rose 0.3%, as noise in the data rather than the beginning of a new trend.

The unemployment rate and number of unemployed persons prior to the coronavirus (COVID-19) pandemic was 3.5 percent and 5.7 million, respectively, in February 2020)

United States Unemployment Rate
United States Non Farm Payrolls
United States Non-Farm Payrolls

Where the Jobs Were:

Job gains were widespread. In September, 5.2 percent of employed persons teleworked because of the coronavirus pandemic, down from 6.5 percent in the prior month. In May 2020, the first month these data were collected, 35.4 percent of employed persons teleworked because of the coronavirus pandemic. These data refer to employed persons who teleworked or worked at home for pay at some point in the 4 weeks preceding the survey specifically because of the pandemic.

Largest gains occurring (prior month) in:

  • Education/health +90k (+75k)
  • Leisure/hospitality +83k (+31k)
  • Business services +46k (+54k)
  • Goods-producing +44k (+35k)
  • Temp help +27k (+13k)
  • Manufacturing +22k (+27k)
  • Construction +19k (+11k)
  • Retail -1k (+43k)
  • Financial -8k (+7k)

That leaves the economy down by 1.2 million jobs, or 0.8 percent, from its pre-pandemic level in February 2020.

Labor force participation rate (blue) down from 62.4% to 62.3%; rate for men (orange) ticked up to 68.1%; rate for women (purple) ticked down to 56.8%

Private Jobs

United States Nonfarm Payrolls - Private

Government Jobs

 

United States Government Payrolls

Manufacturing Jobs

United States Manufacturing Payrolls

Employment in manufacturing increased by 22 thousand in August of 2022, slightly above forecasts of a 20 thousand increase but easing from the upwardly revised 36 thousand jump in the prior month. Employment in durable goods industries rose by 19 thousand workers, while those in non-durable goods industries increased by a softer 3 thousand workers.

 

 Wages Monthly

United States Average Hourly Earnings MoM

Wages Yearly

United States Average Hourly Earnings YoY

 Hours

United States Average Weekly Hours

Other September Employment Reports

 


Household Survey Data  

The unemployment rate edged down to 3.5 percent in September, returning to its July level. The number
of unemployed persons edged down to 5.8 million in September.

Among the major worker groups, the unemployment rate for Hispanics decreased to 3.8 percent in
September. The jobless rates for adult men (3.3 percent), adult women (3.1 percent), teenagers (11.4
percent), Whites (3.1 percent), Blacks (5.8 percent), and Asians (2.5 percent) showed little change over
the month.

Among the unemployed, the number of permanent job losers decreased by 173,000 to 1.2 million in
September. The number of persons on temporary layoff changed little at 758,000.

The number of long-term unemployed (those jobless for 27 weeks or more) was little changed at 1.1
million in September. The long-term unemployed accounted for 18.5 percent of all unemployed persons.

The labor force participation rate was little changed at 62.3 percent in September, and the
employment-population ratio was unchanged at 60.1 percent. Both measures are 1.1 percentage points
below their values in February 2020, prior to the coronavirus (COVID-19) pandemic.

The number of persons employed part time for economic reasons decreased by 306,000 to 3.8 million
in September. These individuals, who would have preferred full-time employment, were working part
time because their hours had been reduced or they were unable to find full-time jobs.

The number of persons not in the labor force who currently want a job was little changed at 5.8
million in September and remains above its February 2020 level of 5.0 million. These individuals were
not counted as unemployed because they were not actively looking for work during the 4 weeks
preceding the survey or were unavailable to take a job.

Among those not in the labor force who wanted a job, the number of persons marginally attached to
the labor force was little changed in September at 1.6 million. These individuals wanted and were
available for work and had looked for a job sometime in the prior 12 months but had not looked for
work in the 4 weeks preceding the survey. The number of discouraged workers, a subset of the
marginally attached who believed that no jobs were available for them, increased by 119,000 to 485,000
in September.


Household Survey Supplemental Data

In September, 5.2 percent of employed persons teleworked because of the coronavirus pandemic,
down from 6.5 percent in the prior month. In May 2020, the first month these data were collected, 35.4
percent of employed persons teleworked because of the coronavirus pandemic. These data refer to
employed persons who teleworked or worked at home for pay at some point in the 4 weeks preceding
the survey specifically because of the pandemic.

In September, 1.4 million persons reported they had been unable to work because their employer
closed or lost business due to the pandemic—that is, they did not work at all or worked fewer hours at
some point in the 4 weeks preceding the survey due to the pandemic. This measure is down from 1.9
million in the previous month and from 49.8 million in May 2020. Among those who reported in
September that they were unable to work because of pandemic-related closures or lost business, 21.4
percent received at least some pay from their employer for the hours not worked, essentially the same
as in August.

Among those not in the labor force in September, 452,000 persons were prevented from looking for
work due to the pandemic, little changed from the prior month. In May 2020, 9.7 million persons were
prevented from looking for work due to the pandemic. (To be counted as unemployed, by definition,
individuals must be either actively looking for work or on temporary layoff.)

These supplemental data come from questions added to the household survey from May 2020 through
September 2022 to help gauge the effects of the pandemic on the labor market. The data are not
seasonally adjusted. Tables with estimates from the supplemental questions for all months are available
online at www.bls.gov/cps/effects-of-the-coronavirus-covid-19-pandemic.htm.


Establishment Survey Data

Total nonfarm payroll employment increased by 263,000 in September. Monthly job growth has
averaged 420,000 thus far in 2022, compared with 562,000 per month in 2021. In September, notable
job gains occurred in leisure and hospitality and in health care.

Leisure and hospitality added 83,000 jobs in September, in line with the average monthly job gain over
the first 8 months of the year. Within the industry, employment in food services and drinking places rose
by 60,000 in September. Employment in leisure and hospitality is below its pre-pandemic February 2020
level by 1.1 million, or 6.7 percent.

In September, employment in health care rose by 60,000 and has returned to its February 2020 level.
Over the month, ambulatory health care services and hospitals each added 28,000 jobs.
Employment in professional and business services continued its upward trend in September (+46,000).
Thus far in 2022, job growth in the industry has averaged 72,000 per month. Employment in temporary
help services continued to trend up (+27,000) in September. Job gains occurred in investigation and
security services (+9,000) and in scientific research and development services (+5,000). Job losses
occurred in business support services (-12,000), legal services (-5,000), and advertising and related
services (-5,000).

Manufacturing employment continued to trend up in September (+22,000). Job gains occurred in motor
vehicles and parts (+8,000), fabricated metal products (+6,000), and electrical equipment and appliances
(+3,000). Printing and related support activities lost 4,000 jobs over the month. Manufacturing has
added an average of 36,000 jobs per month thus far in 2022.

In September, employment in construction continued to trend up (+19,000), in line with average
monthly job growth in the first 8 months of this year. Specialty trade contractors added 18,000 jobs in
September.

Employment in wholesale trade continued its upward trend in September (+11,000). Wholesale trade
has added an average of 18,000 jobs per month thus far in 2022.

In September, employment in financial activities changed little (-8,000), as declines in insurance
carriers and related activities (-9,000) and nondepository credit intermediation (-7,000) were partially
offset by a job gain in depository credit intermediation (+5,000).

Employment in transportation and warehousing was little changed in September (-8,000). A loss of
11,000 jobs in truck transportation was partially offset by a gain of 3,000 jobs in air transportation.
Employment showed little change over the month in other major industries, including mining, retail
trade, information, other services, and government.

Earnings

In September, average hourly earnings for all employees on private nonfarm payrolls rose by 10
cents, or 0.3 percent, to $32.46. Over the past 12 months, average hourly earnings have increased by 5.0
percent. In September, average hourly earnings of private-sector production and nonsupervisory
employees rose by 10 cents, or 0.4 percent, to $27.77.

In September, the average workweek for all employees on private nonfarm payrolls was 34.5 hours for
the fourth month in a row. In manufacturing, the average workweek for all employees was unchanged at
40.3 hours, and overtime held at 3.2 hours. The average workweek for production and nonsupervisory
employees on private nonfarm payrolls increased by 0.1 hour to 34.0 hours.

The change in total nonfarm payroll employment for July was revised up by 11,000, from +526,000
to +537,000, and the change for August remained at +315,000. After revision, employment gains in July
and August combined were 11,000 higher than previously reported. (Monthly revisions result from
additional reports received from businesses and government agencies since the last published estimates
and from the recalculation of seasonal factors.


The Employment Situation for October is scheduled to be released on Friday, November 4, 2022,
at 8:30 a.m. (ET)


Source: AFP, Challenger, DOL, TradersCommunity Data, BLS

From The TradersCommunity News Desk