The U.S. economy added 263,000 jobs in September, just below consensus estimates, while the unemployment rate edged down to 3.5%, which is where it was in July, according to the U.S. Bureau of Labor Statistics.
The strongest job gains were in leisure and hospitality, as well as health care.
The number of unemployed persons edged down to 5.8 million.
The number of long-term unemployed (those jobless for 27 weeks or more) was little changed, at 1.1 million. The long-term unemployed accounted for 18.5% of all unemployed persons.
The labor force participation rate was little changed at 62.3%.
Leisure and hospitality added 83,000 jobs in September, in line with the average monthly job gain over the first eight months of the year. Within the industry, employment in food services and drinking places rose by 60,000.
Employment in leisure and hospitality is below its pre-pandemic February 2020 level by 1.1 million, or 6.7%.
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 construction continued to trend up, increasing by 19,000 compared with July, in line with average monthly job growth in the first eight months of this year.
Specifically, trade contractors added 18,000 jobs in September.
Average hourly earnings for all employees on private non-farm payrolls rose by 10 cents, or 0.3%, to $32.46.
Over the past 12 months, average hourly earnings have increased by 5.0% according to the BLS.
Average hourly earnings of private-sector production and nonsupervisory employees rose by 10 cents, or 0.4%, to $27.77.
Odeta Kushi, deputy chief economist for First American, says while the increase in construction jobs is encouraging, home building is destined for a slowdown.
“Residential building construction employment decreased a modest 0.1 percent, while non-residential picked up by 0.3 percent,” Kushi says. “Residential building is up 7.4 percent compared with pre-pandemic levels, while non-residential building remains approximately 5 percent below. The bigger gains this month came from specialty trade contractors, both residential and nonresidential. This subsector includes companies that primarily perform specific activities, such as pouring concrete, site preparation, plumbing, painting and electrical work.”
“While the construction industry has faced a labor shortage for many years, the slowdown in the housing market and homebuilding, particularly for single-family homes, will likely put downward pressure on job gains in months to come,” she adds.
Kushi notes that although wage growth has slowed, wages are still rising at a faster pace than they were pre-pandemic.
“In September, the annual pace of average non-supervisory hourly earnings slowed from 6 percent to 5.8 percent, still significantly higher than the 3.5 percent pace from February 2020,” she says. “Decelerating, but still hot.”
“Recall that the number of job openings in August dipped 10 percent compared with the previous month to 10 million, but job openings still outpaced hires by 3.8 million, an indication that demand for workers continues to outpace supply,” Kushi says. “We need to see more workers in the labor force, not less.”
“Overall, the September jobs report reflects a still-strong labor market that is gradually cooling,” she adds. “The Federal Reserve really wants to see the labor supply increase, and the September jobs report did not deliver.”
Photo: Saulo Mohana