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Real Estate

Employment Recovery Slips Further in September

Source: https://www.realpage.com/analytics/economic-recovery-slips-september/

The employment recovery from the COVID-19 pandemic recession slowed further in September.

Just 194,000 jobs gained during the month, according to the Bureau of Labor Statistics (BLS). This was far fewer than the roughly half million jobs economists’ were expecting for the month. The good news is that the severity of the Delta variant appears to be waning as of the latter half of September, after the BLS calculated their figures. Additionally, revisions to the previous two months’ data added 169,000 jobs in July and August for a combined 1.46 million jobs gained.

To illustrate the correlation between the effects of the pandemic on employment, the following chart shows monthly employment gain as reported by the BLS and average monthly hospitalizations for COVID-19 as reported by the CDC. Only the months following the initial post-pandemic shutdown bounce back are utilized. Clearly, the health of the economy follows the health of its workers. There is a -65% correlation between the two data series and the fact that hospitalizations for the Delta variant of COVID-19 through the first week of October are down significantly portends well for the economy.

Without the loss of 123,000 jobs in the Government sector in September, private industry employment gains alone were 317,000, not insignificant, but not up to expectations either. The Government sector decline included a loss of 114,200 jobs in local government education, but this is largely due to the difficulties in hiring bus drivers, food service workers, temp teachers, and other positions that have skewed the seasonal adjustment for this group and caused this calculated loss. Education and Health Services and the Other Services categories experienced moderate losses likely caused by the reduction in economic activity due to COVID-19.

The headline or U3 unemployment rate dropped 40 basis points (bps) to 4.8% in September but the civilian labor force participation rate dipped 10 bps from last month and is only 20 bps higher than it was one year ago. The employment-population ratio ticked up 20 bps from August to 58.7% but is also well below pre-pandemic levels.

The number of persons not in the labor force increased by almost 400,000 from last month to 100.4 million, and the portion of those that currently want a job increased by about 300,000. With fewer people in the labor force and/or actively looking for work, the unemployment rate has naturally decreased. The unemployment rate for working-aged women (20+) fell slightly faster (down 60 bps) than that for men (down 40 bps) as more women left the labor force than men in September.

The number of unemployed was almost 7.7 million in September, down from 8.4 million in August with the aforementioned decrease in labor force participation. Still, that is down almost 40% from one year ago. Initial unemployment claims, which had been rising throughout the month of September, fell for the first week of October, indicating the corner may have been turned. However, the level of employment in the U.S. labor market is still about five million workers below the pre-pandemic employment level from February 2020.

With somewhat slower growth in lower-paying industries in September, the annual change in average hourly earnings of $1.39 (to $30.85) was 4.6% greater than last September’s rate. The average annual increase in hourly wages had been about $0.60, or half the current rate, before the pandemic. Industry wage growth varied greatly with Leisure and Hospitality wages jumping 10.8% for the year, while Information employees registered a barely positive 0.8% annual gain.

With the decrease in the overall unemployment rate in September, all industries reported rates below 10% for the first time since the pandemic began. The highest unemployment rate by industry in September was for Leisure and Hospitality Workers at 7.7% (not adjusted for seasonality), with Mining and Logging not far behind at 7.3%. Despite reporting significant job losses in September (seasonally adjusted), the Government sector had the lowest industry unemployment rate at 2.4%, just ahead of the Financial Services industry at 2.5%.

The percentage of workers that telework decreased back to the level seen in July, dipping to 13.2% from 13.4% in August, according to the BLS’s supplemental data measuring the effects of the coronavirus pandemic on the labor market. The rate of telecommuting will likely remain elevated over the next six to 12 months and will undoubtedly remain above pre-pandemic levels going forward as employers balance productivity and teamwork issues with employee satisfaction and competitiveness.

In other September BLS data, the number of people leaving or quitting their job (which had been trending upward) fell from 822,000 in August to 788,000 in September as more workers worry about the economy going forward. The number of unemployed for 27 weeks or longer dropped sharply from 3.2 million in August to 2.7 million in September with the expiration of enhanced unemployment benefits. Those working part-time that want full-time work was virtually unchanged from last month at about 4.5 million, while the number of workers who prefer part-time positions was also unchanged at about 20.4 million.

Workers marginally attached to the labor force fell by about 300,000 from last September to 1.7 million and the number of discouraged workers stood at 409,000, down 147,000. Persons marginally attached to the labor force are those who currently are neither working nor looking for work but indicate that they want and are available for a job and have looked for work sometime in the past 12 months.

The U6 unemployment rate, which includes part-timers for economic reasons and marginally attached workers, fell to 8.5% in September compared to 8.8% last month and 12.8% in September 2020.

Industry Focus

The strong job losses reported in the Government sector in September, coupled with moderate losses in Education and Health Services and Other Services, wiped out what would have been solid gains in other industrial sectors of the economy. The Trade, Transportation and Utilities industry led gains for the month with contributions from retail and wholesale trade and transportation and warehousing, while Leisure and Hospitality gained in a variety of subsectors despite reduced economic activity because of the resurgence of COVID-19 cases around the country.

• Overall, the Trade, Transportation, and Utilities industry gained 120,000 jobs in September, with 56,100 of them in retail trade, particularly general merchandise stores (+16,100) and building material and garden supply stores (+16,000). The transportation and warehousing sector added 47,300 jobs as couriers and messengers and warehousing and storage subsectors benefited from more online shopping. Wholesale trade added an additional 16,900 jobs for the month.

• More than half of the 74,000 jobs gained in the Leisure and Hospitality industry in September were in arts, entertainment, and recreation (+43,000) but food services and drinking places contributed 29,000 jobs to the monthly total despite heightened pandemic concerns.

• Almost 93% of the 60,000 jobs gained in the Professional and Business Services industry came in the high-paying professional and technical services subsector (+55,500), the majority in architectural and engineering services (+15,100) and management and technical consulting services (+15,200). A loss of 5,200 jobs in temporary help services tempered the monthly gain of 1,700 in administrative and waste services.

• The Information industry gained 32,000 jobs for the month with almost half of that in the motion picture and sound recording subsector (+13,700). The publishing industries, except Internet subsector contributed 11,000 jobs to September’s total.

• The Manufacturing industry gained 26,000 jobs in September, as the durable goods sector added 16,000 jobs, with fabricated metal products providing 8,200 of them. Difficulty in procuring semiconductors has caused auto manufacturers to announce cutbacks in September, accounting for the 6,100-job loss in that subsector. Nondurable goods manufacturing added 10,000 jobs for the month, with printing and related activities (+4,200) leading the way.

• The Construction industry gained 22,000 jobs for the month with a strong gain of 11,400 jobs in nonresidential specialty trade contractors. The construction of buildings (+6,300) and heavy and civil engineering construction (+3,100) subsectors gained as well.

• The Mining and Logging industry gained 4,000 jobs in September, led by the support activities for mining subsector (+3,700). The small logging subsector lost 1,000 jobs for the month.

• The Financial Activities industry added only 2,000 jobs in September as solid gains in real estate and rental leasing (+6,900) were offset by losses in finance and insurance (-5,100), primarily in the commercial banking and credit intermediation subsectors.

• The Education and Health Services industry’s monthly loss of 7,000 jobs was largely due to cutbacks in educational services (-18,900) as the child day care services subsector added 17,800 jobs. The health care sector was mixed with an overall loss of 17,500 jobs attributed to a 28,200-job gain in ambulatory health care services more than canceled by losses in nursing and residential care facilities (-37,600) and hospitals (-8,100). Anecdotally, many nursing home facilities are reporting an acute shortage of workers.

• The Other Services sector had a strong loss of 16,000 jobs in September with a decrease of 9,000 jobs in personal and laundry services, followed by membership associations and organizations (-7,100).

• Government education employment cutbacks at the local (-144,200) and state (-16,600) levels reduced overall Government employment by 123,000 workers, with no gain at the Federal level.

To learn more about the data behind this article and what RealPage has to offer, visit https://www.realpage.com/.

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ETR is a primary technology market research firm, capturing real-time evaluations and spending intentions from thousands of enterprise-leading technologists.

For almost 10 years, Global 2000 corporations have trusted ETR’s proprietary technology research to capture real-time market activity. ETR produces market research through standardized surveys and round table discussions, not analyst opinions – our data driven approach quantifies the narrative driving the technology landscape. Marketing, Investor Relations, Corporate Strategy and Corporate Venture Capital teams no longer need to rely on anecdotal evidence to make business decisions. Vendors covered in our surveys gain mindshare among global IT leadership & gain key insights into navigating their competitive landscapes.