U.S. added 661,000 jobs in September, unemployment rate drops to 7.9% amidst concerns of slowing recovery.

The September jobs report released by the U.S. Bureau of Labor Statistics has something for everybody.  Here’s the top line:

Total nonfarm payroll employment rose by 661,000 in September, and the unemployment rate declined to 7.9 percent, the U.S. Bureau of Labor Statistics reported today. These improvements in the labor market reflect the continued resumption of economic activity that had been curtailed due to the coronavirus (COVID-19) pandemic and  efforts to contain it. In September, notable job gains occurred in leisure and hospitality, in retail trade, in health care and social assistance, and in professional and business services. Employment in government declined over the month, mainly in state and local government education.

This is the last jobs report before the November election and, therefore, inevitably, it is being assessed through a political lens by some. FiveThirtyEightt calls it a political Rorschach test.  

Even in a normal year, our election analysis would be looking at the jobs report as just one economic indicator among many. But this year is even weirder than usual because there’s kind of a Rorschach test element to the report — people of different political leanings can see what they want to see.

Historically, jobs reports released shortly before the election have been reasonable bellwethers for how the incumbent party will do, although the last jobs report of the cycle isn’t necessarily the most reliable. In the 18 presidential elections since 1948,1 the unemployment rate in the September before an election has had little correlation with the incumbent party’s eventual popular vote margin. But when you frame that September number relative to earlier months — particularly the previous six to 12 months — it has traditionally been a much stronger predictor of electoral success for the incumbent party.

We’ll leave it to sort through their political analysis, interesting as it is. 

The Associate Press offers five takeaways on the jobs report. The main AP story on the report includes this:

With September’s hiring gain, the economy has recovered only slightly more than half the 22 million jobs that were wiped out by the viral pandemic. Nearly 10 million jobs remain lost — more than were shed during the entire 2008-2009 Great Recession. And the pattern of slower hiring will delay a full recovery of jobs: Compared with September’s more modest gain, employers added nearly 1.5 million jobs in August, 1.8 million in July and 4.8 million in June.

Calculated Risk assesses the report.

The September employment report was below expectations, although employment for the previous two months were revised up.

Leisure and hospitality added another 318 thousand jobs in September, following 4.16 million jobs added in May through August. Leisure and hospitality lost 8.3 million jobs in March and April, so about 54% of those jobs were added back in the May through September period.

Much more at the link. CR concludes:

The headline monthly jobs number was below expectations, however the previous two months were revised up 145,000 combined.  The headline unemployment rate decreased to 7.9%, however this was somewhat due to the wrong reasons (decline in participation).

The rise in permanent job losers, and the decline in prime participation and in the prime employment population ratio are concerning.   Although there was some improvement, overall this was a disappointing job report.
Right trend. Pace too slow.