Payrolls Huge Miss: Just 194K Jobs Added In September, Even As Unemployment Rate Tumbles
Well, coming into today’s payrolls report we said that the number would be a beat and the only question was how big, as a result of millions of Americans seeing their emergency benefits expiring. Boy were we wrong: moments ago the BLS reported that with expectations of a 500K print and whisper numbers sharply higher, in September the US added just 194K jobs, down by nearly half from the upward revised 366K in August, and the lowest print of 2021, likely crushing the Fed’s entire tapering schedule as this number was so bad as to pass as a “major shock” from the Fed’s perspective.
Despite the dismal headline print, there were several mitigating factors:
First, the number of employed workers tracked by the Household Survey actually rose by 526K, sharply better than the headline Establishment Survey print.
Second, both prior months were revised higher, with the change in employment for July revised up by 38,000, from +1,053,000 to +1,091,000, and the change for August was revised up by 131,000, from +235,000 to +366,000.
A third mitigating factor to the horrendous headline number is that the miss seems like it’s mostly in the government sector as opposed to the private sector: private payrolls added 317K, missing the expectation of 450K far less than the headline print. Meanwhile, government workers tumbled by a whopping 123K, led by the loss of 144K government education jobs. As shown below, this was the biggest drop in government workers since 2020.
A fourth silver lining: the unemployment rate actually plunged to just 4.8%, from 5.2% and below the 5.1% expectation, dropping for all races as the number of Unemployed workers plunged by 710K from 8.384MM to 7.674MM.
Curiously, even as the unemployment rate dropped, the participation rate also declined from 61.7% to 61.6% as the civilian labor force somehow shrank in September by 183K to 161.354 million. Adding to the confusion, the employment-population ratio rose to 58.7% from 58.5%, if still a far cry from the pre-pandemic 61.1%.
A fifth positive offset: the average hourly earnings actually ticked up again, rising from 0.4% to 0.6%, beating the consensus of 0.4%. On a Y/Y basis, earnings rose 4.6%, in line with expectations.
Some more details from the report: workers unable to work due to bad weather was 94K, slightly higher than the historical average for Sept. which is 83k. Tied to this, 404k workers who usually work full-time could only work part-time due to the weather last month.
Looking at the youth component, some more ominous trends emerge:
The underemployment rate for young adults aged 16 to 24 in Sept. is 14.2%, according to Bloomberg calculations of Bureau of Labor Statistics data.
Total unemployed aged 16-24 at 1,772,000
Marginally attached workers aged 16-24 at 450,000
Employed part-time for economic reasons aged 16-24 at 717,000
Civilian labor force aged 16-24 at 20,318,000
Fri, 10/08/2021 – 08:34