U.S. employers added fewer jobs than expected in September as the pace of the labor market’s recovery from the coronavirus pandemic continued to slow.
The Labor Department reported Friday that nonfarm payrolls rose by 661,000 last month and the unemployment rate was 7.9%. The jobs gain was the smallest since the economy reopened in May and fell below economists’ expectations of an 800,000 increase.
Payrolls are still 10.7 million below their pre-pandemic level and hopes of a swift recovery appear to be fading as permanent job losses increased by 345,000 to 3.8 million in September.
“The pace of jobs recovery apparent in today’s report suggests that we will be counting the employment recovery in years, not months or quarters,” Marianne Wanamaker, a labor economist at the University of Tennessee, Knoxville, told The Wall Street Journal. “We’re not going to gain jobs as rapidly as we did in May and June.”
According to Reuters, the report — which also showed the labor participation rate fell last month to 61.4% from 61.7% in August — “underscored an urgent need for additional fiscal stimulus to aid the economy’s recovery from a recession triggered by the COVID-19 pandemic.”
“The virus is in the driver’s seat in controlling the speed of the recovery and right now the economy is in the slow lane unless Congress and the White House can settle their differences and provide additional stimulus,” Chris Rupkey, chief economist at MUFG in New York, said.
The public sector was the biggest drag on the labor market in September, losing 216,000 jobs due to a drop in local and state government education as many schools maintained at-home instruction due to the virus. A reduction in census workers also pulled 34,000 from the total.
Workers reporting being on temporary layoff fell by 1.5 million to 4.6 million after peaking at 18.1 million as payrolls plunged by 22 million in March and April.
“We’re looking at state and local government layoffs, we’re looking at a higher level of permanent job losses and more people leaving the workforce,” Kathy Jones, head of fixed income at Charles Schwab, told CNBC. “None of that is good for the long run.”