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September Jobs Report Reveals Slowing Economy Ahead of Presidential Election

Nonfarm payrolls rose by a lower than expected 661,000 in September, and the unemployment rate was 7.9%, the Labor Department said on October 2 in the final jobs report before the November election. Economists surveyed had been expecting a net job gain of 800,000, and the unemployment rate to fall to 8.2% from 8.4% in August. The payrolls miss was mainly due to a drop in government hiring as at-home schooling continued, and Census jobs fell. “The issue is momentum, and I think we’re losing it,” said Drew Matus, chief market strategist for MetLife Investment Management. “When you go through a significant disruption to the labor market, it takes time to fix itself. That’s without regard to whether there’s a virus.”

The decline in the unemployment rate came with a 0.3 percentage point drop in the labor force participation rate to 61.4%, representing a decline of nearly 700,000. However, a separate, more encompassing measure that counts discouraged workers and those working part-time for economic reasons also saw a notable decline, falling from 14.2% to 12.8%. The unemployment decline for African Americans was even sharper than the headline rate, falling from 13% to 12.1%. The Asian rate declined from 10.7% to 8.9%. Leisure and hospitality led job gains with 318,000 while retail added 142,000 and health care and social assistance increased by 108,000. As expected, government jobs were the biggest drag on the month, losing 216,000 due to a drop in local and state government education as many schools maintained at-home instruction due to the virus. A reduction in Census workers also pulled 34,000 from the total. In other sectors, health care and social assistance gained 108,000, professional and business services contributed 89,000 and the transportation and warehousing sector was up 74,000. Manufacturing grew by 66,000, financial activities added 37,000, and the other services category rose by 36,000. Markets reacted little to the report, with stocks still heading for a lower open following news that President Donald Trump said he and first lady Melania Trump tested positive for Coronavirus.

Despite the deceleration in job creation, there were some positive signs as the economy continues its pandemic-era recovery. Those reporting being on temporary layoff fell by 1.5 million to 4.6 million. Workers holding part-time jobs for economic reasons fell by 1.3 million to 6.3 million, and the totals for longer-term layoffs also decreased considerably. The temporary layoff total peaked at 18.1 million as payrolls fell by 22 million in March and April. However, permanent job losses increased by 345,000 to 3.8 million, in total a 2.5 million increase since February, the month before the World Health Organization declared the Coronavirus pandemic. “Permanent jobs losses rose by more than 300,000. That’s not a good thing. The labor force participation rate declined, which pulled the overall unemployment rate down. That’s not a good sign, either,” said Kathy Jones, head of fixed income at Charles Schwab. “We’re looking at state and local government layoffs, we’re looking at a higher level of permanent job losses and more people leaving the workforce. None of that is good for the long run.”

Matthew Rosehttp://ourpolitics.net
Matt studies and analyzes politics at all levels. He is the creator of OurPolitics.net, a scholarly resource exploring political trends, political theory, political economy, philosophy, and more. He hopes that his articles can encourage more people to gain knowledge about politics and understand the impact that public policy decisions have on their lives. Matt is also involved in the preservation of recorded sound through IASA International Bibliography of Discographies, and is an avid record collector.

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