• US adds 661,000 jobs in September

• Unemployment falls for fifth straight month to 7.9% from 8.4%

• Wage growth increased 0.1% mom and 4.7% yoy

• Labor force participation rate declined to 61.4%

• Jobs recovery still on track, but pace continues to slow

US non-farm payrolls (NFP) rose 661k in September versus the 859k consensus and while there has been a net upward revision of 145k to the previous two months of data, it does not change the narrative of stalling momentum in the jobs market. The change in total nonfarm payroll employment for July was revised up by 27k from 1.734m to 1.761m and the change for August was revised up by 118k from 1.371m to 1.489m. With these revisions, employment in July and August combined was 145k more than previously reported.

Private sector hiring held up better, increasing 877k, but that too marks a downshift from the 1.02m jobs added in August and the 2.43m average registered the prior three months. Job gains continue to be strongest in the industries hardest hit by shutdowns in last spring. Leisure & hospitality jobs rose by 318k with 54% of jobs lost since February recovered. Retail jobs have bounced back even more impressively with another 142k added for 80% of losses recovered as consumers have devoted more spending to goods and services. That shift has also benefited manufacturing, where hiring rose by the most in three months (+66k). Government jobs declined by 216k in September, as employment in local government education (-231k) and state government education (-49k) fell. There was also a drop in the number of temporary Census 2020 workers, which was behind the decline in Federal government employment (-34k).

The unemployment rate fell further to 7.9% from 8.4%, but much of this was due to a fall in the participation rate to 61.4% from 61.7%. With unemployment still high, average hourly earnings ticked up just 0.1% mom. Wage growth is at 4.7% yoy, but this figure is distorted by the fact that most of the jobs lost since February have been concentrated in low paying sectors.

Source: BIMB Securities Research - 5 Oct 2020