The unsteady U.S. economic recovery from the immense damage wrought by COVID-19 is running out of steam, with new data showing a sharp drop in the number of available jobs in September.
American employers only added 661,000 jobs compared to the 800,000 new jobs expected by analysts. Data from the Department of Labor released Friday said this was the smallest monthly increase in jobs since employment started its slow recovery back in May.
"The issue is momentum, and I think we're losing it," said Drew Matus, chief market strategist for MetLife. "When you go through a significant disruption to the labor market, it takes time to fix itself. That's without regard to whether there's a virus."
The labor department said the labor force participation rate was 61.4% in September, down from 61.7% in August and lower than any time since the 1970s. It was an indication many more Americans had given up looking for work, or had stopped working entirely, due to the tight employment market. This number was placed at more than 700,000.
On the other hand, the national jobless rate fell to 7.9% in September compared to 8.4% in August. This apparent improvement, however, wasn't due to any increase in the number of available jobs. It was driven by a sharp plunge in the number of people in the total labor force.
September's 7.9% jobless rate is twice that of the 3.5% jobless rate posted in February, the last month of job growth in 2020 before the pandemic wrecked the economy.
Economists said restaurants and retailers added more jobs but the number of people employed by the local and federal government fell sharply after a welcome increase in August. The August spike in government jobs was caused by hiring for the new U.S. census.
Economists are raising loud warnings about the risk of another economic slowdown as the surge in hiring due to the initial business re-openings fade and government financial aid for businesses and unemployed households languishes in Congress.
"The easy part of the labor market recovery is largely behind us now," said Brian Coulton, chief economist at Fitch. "A lot of jobs still came back in September but the pace of improvement is clearly slowing. The sobering statistic here is that 36% of unemployed are now classed as permanent job losers, up from 14% in May."
Blacks and Hispanics are the hardest hit by the jump in unemployment. In September, the unemployment rate for Black workers stood at 12.1%. The rate for Hispanics was 10.3% and stood at only 7% for White workers, said the labor department.
