U.S. Payroll Gain Moderates in September, but Jobless Rate Falls

Nonfarm payrolls increased 263,000 (3.7% y/y) during September following an unrevised 315,000 August rise. Payrolls rose 537,000 in July, revised from 526,000. Expectations had been for a 250,000 rise in the Action Economics Forecast Survey. On average, payrolls have risen 420,000 each month during 2022 versus a 562,000 average in 2021.

Average hourly earnings rose an expected 0.3% last month, after increasing an unrevised 0.3% in August and 0.5% in July. The 5.0% y/y gain compared to 4.9% growth last year and 5.5% in 2020.

The unemployment rate, measured in the household survey, fell to 3.5% in September from 3.7% in August. An unchanged 3.7% rate had been expected. Household employment rose 204,000 following a 442,000 August increase. The labor force fell 57,000 after surging 786,000 in August. The overall unemployment rate, including workers who are marginally attached & part-time for economic reasons, slipped to 6.7% from 7.0%.

In the establishment survey, the moderation in payroll job growth occurred as government sector payrolls declined 25,000 last month (+0.7% y/y) after strengthening 40,000 in August. State government employment fell 16,000 (+0.1% y/y) after improving 1,000 while local government jobs weakened 11,000 (+1.3% y/y) after gaining 41,000 in August. Federal government payrolls rose 2,000 (-0.8% y/y) last month and reversed the August decline.

Private sector employment improved 288,000 (4.2% y/y) after rising 275,000 in August. The increase reflected a 19,000 (3.7% y/y) gain in construction sector employment after an 11,000 increase in August. Factory sector employment rose 22,000 (3.7% y/y) following a 27,000 August gain. Mining & logging employment rose 3,000 (9.8% y/y) and reversed the August decline.

Private service-producing sector employment increased 244,000 in September (4.3% y/y) after improving a lessened 240,000 in August. Varied m/m changes were logged amongst service sector categories. Education & health care jobs rose 90,000 (3.8% y/y) after a reduced 75,000 August gain. Leisure & hospitality employment gained 83,000 in September (8.1% y/y) following a 31,000 increase. Professional & business services jobs improved 46,000 (4.6% y/y) after an 54,000 increase. That included an 27,200 rise (7.6% y/y) in temporary help employment. Employment in trade, transportation & utilities edged up 3,000 (3.1% y/y) as retail jobs eased 1,000 (+2.0% y/y). Information sector employment rose 13,000 (6.0% y/y) after increasing 5,000 in August. Financial sector employment declined 8,000 (+1.8% y/y) following two straight months of 7,000 increase.

Private-sector average hourly earnings rose 0.3% in September for the second consecutive month. The 5.0% y/y increase was below the 5.6% March peak. Earnings in the goods-producing sector rose 0.4% after a 0.2% July gain. The 4.4% y/y rise remained below the 5.2% y/y March high. Earnings in construction rose a steady 5.5% y/y followed by a 3.7% y/y gain in the factory sector which was below 5.2% January peak. In the private services-producing sectors, earnings rose 0.3% (5.1% y/y) for the second straight month. The 7.9% y/y rise in leisure & hospitality earnings stayed below the 13.3% December peak, and professional & business sector earnings increased 5.2% y/y, down from 7.0% in March. Information service sector earnings rose 7.2% y/y, up from stability y/y last fall. The gain in financial activities earnings accelerated to 4.8% y/y from 2.7% as of May but it remained below the 7.8% March 2021 peak.

The length of the average workweek held steady at 34.5 hours in September. These readings remained below the 35.0 hour high reached in January of last year. The workweek in the goods-producing sector held at 39.9 hours and has been trending sideways since late-2021. The construction sector average workweek held steady at a reduced 38.7 hours and the factory sector workweek stayed at 40.3 hours. The average workweek in the private service-producing sector rose slightly to 33.5 hours but it remained below the 33.9 hour high in early-2021. The aggregate weekly hours index, a key indicator of production and income, rose 0.2% in September but the 3.5% y/y rise was below last year's 5.5% increase.

The household survey indicated a decline in the jobless rate to 3.5% as the size of the labor pool fell after jumping in August. The labor force participation rate fell to 62.3% last month from 62.4% in August. It remained below the high of 63.4% early in 2020. The rate for teenagers declined to 36.7% from 37.7% in August. For workers aged 20-24, the rate rose to 70.7% but remained below a 72.0% December high. For workers aged 25-54, the rate eased to 82.7% but remined near the highest rate since before its collapse in the 2020 recession. For individuals 55 and over, the rate increased to 38.8% and has been trending lower since February.

The employment/population ratio for all workers in September held m/m at 60.1%, up from 58.0% in June of last year. It remained below its reading of 61.2% in February 2020 just prior to the pandemic.

The average duration of unemployment fell sharply in September to 20.2 weeks and remained below a 31.6 week high in June of last year. The median duration of unemployment slipped to 8.3 weeks, a five-week low and stood below its 19.6 high in June 2021. The ranks of those individuals unemployed for 27 weeks or more fell sharply m/m and fell 59.9% y/y.

The employment and earnings data are collected from surveys taken each month during the week containing the 12th day of the month. The labor market data are contained in Haver's USECON database. Detailed figures are in the EMPL and LABOR databases. The expectations figures are in the AS1REPNA database.