September jobs report misses expectations with just 194,000 new payrolls amid Delta slowdown

September jobs report misses expectations with just 194,000 new payrolls amid Delta slowdown
A Now Hiring sign hangs near the entrance to a Winn-Dixie Supermarket on September 21, 2021 in Hallandale, Florida. Joe Raedle/Getty Images
  • The US added 194,000 jobs in September, badly missing the 500,000-payroll estimate and slowing even further from dismal August hiring.
  • The unemployment rate fell to 4.8% from 5.2%, a beat of estimates.
  • The report signals job creation worsened last month as the Delta wave reached its peak.

Another month of the Delta wave, another disappointing jobs report. US businesses added fewer jobs than forecast in September, signaling the recovery was still on the ropes as fall began.

The country gained just 194,000 nonfarm payrolls last month, the Bureau of Labor Statistics said Friday morning. That fell badly short of the 500,000-payroll estimate from economists surveyed by Bloomberg. At the same time, August job growth was revised to 366,000 from 235,000 payrolls.

The data signals hiring faltered again last month. Although the print marks a ninth straight month of job additions, it more importantly shows a slowdown from even the dismal growth seen in August.

The household survey, which is used as the basis for the unemployment rate, showed much better news than the headline non-farm payroll numbers. The number of unemployed Americans dropped by a healthy 710,000, leaving roughly 7.7 million workers unemployed by the time the government's survey period ended in mid-September.

According to that survey, employment rose by 526,000. That combination led to a better-than-expected drop in the unemployment rate to 4.8% from 5.2%, handily beating the median forecast of a 5.1% rate.


Another promising sign: The average hourly wage increased by 19 cents, or 0.6%, between August and September to $30.85. That beat the average forecast of a 0.4% gain. The average wage has taken on increased importance in recent months as businesses struggle to rehire amid the unusual labor shortage. While some firms have waited for more Americans to rejoin the workforce, others have raised pay to attract workers and quickly fill openings.

Broadly, the Friday report shows a labor market moving slower toward a full recovery amid the Delta wave hitting its peak. Daily case counts hit a record high on September 7 and started to decline through the second half of the month. Since the jobs report's survey period ended halfway through the month, it missed the weeks in which cases began to drop.

If the slide in new cases holds, October job gains could be even stronger, as the pace of recovery has closely mirrored the virus's spread. The Delta wave is widely believed to have dented job growth in August as some economic restrictions were reinstated and Americans' hopes for the recovery cratered.

Consumer sentiment rebounded only slightly in September, according to the University of Michigan's Surveys of Consumers.

The bigger picture of Delta-era hiring

The Friday report includes insights beyond the broad job gains and the unemployment rate. It reveals where hiring accelerated, which sectors fell behind, whether more Americans entered the workforce, and how the pandemic continues to roil the labor market.


The leisure and hospitality sector added the most jobs throughout September, with an addition of 74,000 payrolls. That sector had counted for much of the hiring recovery in the spring and summer before drastically slowing down to a near-halt in August.

Local government education shed 144,200 jobs, according to the report, making it the biggest loser of the month. However, BLS noted that this is a bit of an anomaly - the algorithm used to adjust the numbers for seasonal patterns in hiring and layoffs expect a big surge in hiring at the start of the school year, but the vagaries of remote and hybrid learning over the last two years threw those typical patterns into chaos in 2021. The public school sector actually added over 600,000 jobs on a non-seasonally adjusted basis, which is still less than the seasonal adjustment expected.

The U-6 unemployment rate - which includes Americans marginally attached to the workforce and those working part-time for economic reasons - dipped to 8.5% from 8.8%.

Finally, the labor-force participation rate moved slightly lower, to 61.6% from 61.7% in August, showing that some Americans stopped looking for work through the month. September saw the federal government's boost to unemployment insurance lapse nationwide, after 26 states had ended the federal benefit prematurely, leaving recipients with weaker assistance amid the Delta surge. The $300-per-week boost ended on September 6 and filings for UI aid have hovered at elevated levels since, suggesting the expiration did little to encourage job takeup.