U.S. Adds 661,000 Jobs; Unemployment Rate Drops

U.S. Adds 661,000 Jobs; Unemployment Rate Drops

Society for Human Resource Management- October 2, 2020

U.S. payrolls increased by 661,000 in September, according to the latest report from the Bureau of Labor Statistics (BLS)—falling below what economists expected. The report is more evidence that the pace of hiring has slowed, as more layoffs loom.

The unemployment rate fell to 7.9 percent from 8.4 percent in August. Economists had been expecting an employment gain of 800,000 and the unemployment rate to fall to 8.2 percent.

The economy has now recovered 11.4 million of the 22 million jobs lost in March in April at the beginning of the pandemic, but job growth is stalling—September was the first month since April that net hiring was below 1 million.

This slowdown is occurring as large corporate layoffs not reflected in the report are imminent: Walt Disney Co. announced 28,000 permanent layoffs and U.S. airlines are proceeding with tens of thousands of job cuts.

“The economy may have added jobs, but at a pace way too slow considering how many jobs were lost earlier this year,” said Nick Bunker, an economist at the Indeed Hiring Lab. “The unemployment rate may have dropped, but the share of people with a job only moved up slightly. This report is an illusion of progress at a time when we needed accelerating gains in the labor market. We are not where we need to be, nor are we moving fast enough in the right direction as we head into fall.”

The BLS report is the last one before the presidential election on Nov. 3.

“The report shows we are still clearly in the snap-back phase of the recovery, as jobs that were switched off because of COVID are blinking back online,” said Andrew Challenger, senior vice president of global outplacement and executive coaching firm Challenger, Gray & Christmas, based in Chicago. “While we’re seeing jobs come back, there is concurrent destruction occurring in the labor market as companies right-size their organizations to meet the decidedly lower demand they expect to face over the next two or three years,” he said.

Employers continue to bring back workers—about half of the workers furloughed or laid off at the onset of the pandemic have now been rehired—but the pace of recovery is slowing while there is still a long way to go, said Julia Pollak, a labor economist at ZipRecruiter, an online employment marketplace in Santa Monica, Calif. “Even after the recent gains, we still have nearly 11 million fewer jobs than before the pandemic,” she said. “By comparison, we lost 8.7 million jobs in the Great Recession.”

Becky Frankiewicz, president of ManpowerGroup North America, said that the BLS report shows steady improvement, especially hiring in leisure and hospitality and operations and logistics.

Job gains were broad-based, with most sectors of the economy adding to payrolls in September, said Andrew Chamberlain, chief economist at Glassdoor.

Employment in leisure and hospitality increased by 318,000, with almost two-thirds of the gain occurring in restaurants and bars. Despite job growth totaling 3.8 million over the last five months, employment in this sector is still down by millions since the onset of the coronavirus.

Retailers added 142,000 jobs, with most of those coming in clothing stores.

“The recovery is primarily being driven by continued rehiring in the hardest-hit industries including leisure and hospitality, retail and health care,” Chamberlain said.

“Many service-sector industries are continuing to recover briskly as many states and cities eased coronavirus restrictions and increased capacity limits on restaurants, gyms and stores,” Pollak said. “As restrictions are lifted in the largest cities, we can expect to see a rapid bounce back.”

She added that some industries haven’t yet begun to recover. “The education sector is still shedding jobs, as are the performing arts and spectator sports, hospitals, coal mines, facilities support services and travel agencies.”

Professional and business services contributed 89,000 jobs and the transportation and warehousing sector was up 74,000 jobs. Manufacturing grew by 66,000, financial activities added 37,000 and construction employment grew by 26,000 jobs last month, mostly in residential building. By comparison, nonresidential building gained 5,300 jobs and infrastructure work lost 3,400 positions.

Public-sector employment declined by 216,000 jobs in September, mainly due to state and local public schools failing to reopen due to the national health crisis. “Another deeply concerning thing is that we are down 1.2 million state and local government jobs over the last seven months, more than two-thirds of them in education,” said Heidi Shierholz, senior economist at the Economic Policy Institute in Washington, D.C. This will only get worse without aid from Congress, she added.

A decrease of 34,000 jobs in the federal government was driven by a decline in the number of temporary Census 2020 workers. “Nearly a quarter of a million jobs are temporary jobs related to the decennial census that will disappear in the next few months,” Shierholz said.

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