The U.S. added 194,000 new jobs in September, causing the employment rate to decrease 0.4 percentage points to 4.8%, according to Friday's report from the U.S. Bureau of Labor Statistics (BLS). However, this number was much lower than the job gain that was expected for the month.
"Job growth remained lackluster in September following similarly disappointing gains in August," Mike Fratantoni, Mortgage Bankers Association (MBA) chief economist, said. "Although private sector job growth was at 317,000, and several categories showed gains – including professional services – there was a large drop in education employment. This was a byproduct of school hiring still being relatively weak compared to the typical seasonal patterns."
Fratantoni said the unemployment rate hitting below 5% and the steady job growth, while lower than expectations, will keep the Federal Reserve on its path to end its economic stimulus as it closely watches the labor market. This means interest rates are still expected to rise steadily in the coming months if the labor force continues to grow and the COVID-19 Delta variant does not cause significant disruptions.
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Economic improvement not "dramatic enough"
Speaking about the September jobs report at a press conference Friday morning, President Joe Biden touted the success of the economy during his presidential term and said the employment report was positive news. He did, however, acknowledge market expectations.
"Maybe it doesn’t seem dramatic enough," Biden said. "I too would like it to move faster, but we’re making steady progress."
The labor force participation rate showed little change at 61.6% in September, the Labor Department reported. However, some sectors, such as the public education sector, saw a decrease in normal seasonal hiring as back-to-school rules varied from one state to the next. One economist said the report showed mixed signs of recovery in today’s abnormal season of hiring, especially in the education sector.
"As in recent months, job gains were concentrated in the service-providing sectors; in particular, the leisure and hospitality (+74,000 jobs), professional and business services (+60,000 jobs), and retail trade (+56,100 jobs) sectors showed healthy gains last month," Fannie Mae Chief Economist Doug Duncan said. "On the other hand, employment in the state, local and private education sectors fell by a combined 180,000 in September.
"Hiring in these sectors, while positive on a non-seasonally adjusted basis, was much lower than would be expected for September, resulting in seasonally adjusted job losses," Duncan said. "This abnormal seasonal pattern has been distorting the overall job growth picture for several months."
The new level of employment in the report is likely to keep the Central Bank on track with its plan to end its stimulus this year and perhaps look at interest rate hikes as soon as 2022. Borrowers can save money now before rates potentially go up by refinancing their private student loans. Visit Credible to view options from multiple lenders at once and choose the one that is the best fit for you.
"More to do, but great progress."
Speaking about the jobs report, Biden that there is still "more to do, but great progress" has been made in the path to recovery from the pandemic-induced recession.
An economist said that a more positive report on recent employment changes would have been a better sign of an improving economy, but forecasts the September report will still be good enough for the Federal Reserve.
"For several members of the Federal Reserve, a stronger September jobs report would have met the employment test to start tapering asset purchases," Dawit Kebede, Credit Union National Association (CUNA) senior economist, said. "However, declining unemployment rates could suffice for the Federal Reserve to start slowing down the purchase of Treasury and mortgage-backed securities as early as next month."
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