The Employment Situation for September 2023

US employers added 187 thousand jobs last month, which is a small uptick from the adjusted prior month’s payroll additions but largely represents a continuation of the trend of slowing demand for labor that we’ve seen over the past few months.

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Meanwhile, the US unemployment rate climbed by three-tenths of a point to 3.8%, reversing a two-month long downward trajectory and ticking back up to a level last seen in February of 2022.

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The number of both short-term and long-term unemployed people rose slightly, totaling about 2.9 million in the US, almost half of which are people who lost their jobs or whose temporary work term expired, while about 30% of which are people are reentering the labor market after neither working nor qualifying as unemployed for some period of time prior to beginning their present job search. 

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It’s also worth noting that almost 10% of current unemployed workers are new entrants to the job market who have never worked before, whereas people who left their job make up about 13% of the current unemployed population.

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Overall, the labor force participation rate, which represents the number of people in the US who either have a job or are seeking one, rose by two-tenths of a point to 62.8%, which is the highest this metric has been since February of 2020 before the first wave of the pandemic hit the US in earnest. 

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The healthcare industry saw the largest number of jobs added to their ranks with about 70 thousand new payroll entries nationwide last month, followed by leisure and hospitality at plus 40 thousand. The social assistance and construction industries each added about 25 thousand as well, while the professional and business services industry grew by about 19 thousand jobs. 

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Not all industries saw job growth last month, however. Transportation and warehousing jobs fell by about 34 thousand last month while the information industry lost about 14 thousand. Most other industries saw no significant change either way, including the mining industry, oil & natural gas extraction, manufacturing, retail, and government. 

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Average pay was up 8 cents last month and has climbed 4.3% over the past 12 months, while the average workweek increased by .1 hour to 34.4 hours per week.

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Mployer Advisor’s Take

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This is the third month in a row in which fewer than 200 thousand new jobs have been added, which is a streak that hasn’t occurred since the period of explosive job growth that followed the initial Covid crash began.

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To be clear, these job figures are still very strong compared to historical averages, but relative to the surge we’ve clocked over the past couple of years, the numbers are apparently normalizing. 

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Further, given that the initially reported figures from the last 2 months of employment data were subsequently revised downward by more than 100 thousand jobs collectively, there’s a fair chance that the current figures are a bit inflated from where they will ultimately settle upon further data collection and analysis. 

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The big picture continues shaping up to look a lot like the soft landing sought by the Federal Reserve, in which interest rate hikes cool down a hot job market to help dampen inflation without triggering a full scale recession. 

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While many economists and forecasters continue to predict some degree of economic downturn within the next 12 months, the predicted downturns have lessened in severity and duration on average, indicating that the soft landing is indeed possibly coming into view. 

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While another interest rate hike is certainly not out of the question later this month, at this point a pause in the rate hiking campaign when the Fed Board convenes later this month is becoming increasingly more likely. 

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Removed from any pandemic-related context, this latest jobs report might look to an objective observer like a pretty typical if not good, normal jobs report, which is exactly what the Fed and many optimistic economic observers wanted to see. 

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