Payroll employment rose by 194,000 in September after being revised up for both August and July. A large miss in public sector education accounted for much of that shortfall. Public sector jobs fell by 123,000, mostly in education.
The shortfall in public sector education jobs is partially a seasonal problem. We usually see more than a million workers return to their jobs in education in September. The need to close schools due to quarantines as cases spread undermined those gains along with a hesitancy by workers to return to low-wage support jobs, which also carry a high risk of contagion. Massachusetts was forced to enlist the help of the national guard to drive school busses.
Private sector employment rose by 317,000 which, with the revisions, are very close to our more modest expectations for employment during the month. Gains were broad-based, albeit not as robust as we saw earlier in the year. Hiring in leisure and hospitality came back. This is typically a time of year when restaurants and resorts scale back after summer vacations. That did not happen in September. We are still down 1.6 million jobs in leisure and hospitality from the pre-crisis peak in February 2020.
Next up was professional services, retail, transportation and warehousing. The gains in professional services were concentrated in full-time positions with a heavy emphasis in architects, engineers, and tech consultants. We are also seeing some movement in R&D jobs.
Manufacturing, construction and mining posted modest gains. The vehicle industry remains hobbled by chip shortages. Gains in construction were concentrated among specialty contractors, mostly in nonresidential. Labor shortages of skilled tradespeople remain acute; few were trained to build houses in the wake of the housing bust.
Hiring in the health care sector is still lagging as quits and retirements remain elevated. Hiring at nursing and residential care facilities continued to drop; we have lost jobs in that sector for the last 18 months in a row. Many facilities are reporting that they can not find workers at any wage.
Average hourly earnings surged 19 cents an hour and 4.6% from a year ago, a sharp acceleration from last month. The gains were concentrated in nonsupervisory jobs. Gains were broad-based, but particularly strong in warehousing and transportation.
The number of hours worked moved higher, which will provide a boost to weekly earnings. Many needed those gains in September, given the lapse in unemployment benefits. More than seven million workers lost expansions and supplements to unemployment insurance during the month.
The household survey was more upbeat with stronger job gains and a sharp drop in the number of unemployed. The unemployment rate dropped 0.4% to 4.8% in September. The number of workers who could not work due to illness continued to tick higher. COVID cases were still rising the week that the survey for the month was taken. The largest improvement in the unemployment rate was for Black workers, which plummeted nearly a full percentage point during the month. Sadly, it was a loss in participation among Black workers that drove that decline. The unemployment rate for Black workers is still at 7.9%, well above the low of 5.2% in the summer of 2019.
Participation in the labor market overall ticked down a bit to 61.6%. Nearly 200,000 left the labor force during the month, reversing the gains from August. All of the losses were women. Mothers continued to struggle with childcare and the challenge of quarantines after schools reopened. We are still down three million workers from February of 2020; women make up 64% of those workers.
Participation in the labor force tends to lag overall improvements in the labor market. The longer the pandemic persists, the more that is the case. The current situation looks closest to what we experienced in 2014, which means we could still be nine months out from a more sustained rise in participation in the labor market.
The ranks of the long-term unemployed fell during the month, which is more encouraging. Some workers are still able to make the transition from unemployment to work. Those forced to accept part-time instead of full-time positions remained elevated.
Employment in September was better than it appeared in the headline numbers. Job gains are well within the range of what the Federal Reserve required to move forward with tapering its asset purchases; that will commence in November.
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