Economy adds disappointing 194,000 jobs in September as schools reopen but COVID spikes linger

[USA TODAY, Getty Images]

Hiring slowed again in September as a surge in COVID 19 cases offset the reopening of most schools and expiration of unemployment benefits, developments that were expected to coax some Americans back to work.

The economy added 194,000 jobs and the unemployment rate, which is calculated from a different survey, fell from 5.2% to 4.8%, the Labor Department said Friday.

Economists surveyed by Bloomberg had estimated that 488,000 jobs were added last month.

A modest consolation: Job gains for July and August revised up by a total 169,000.

So far, the U.S. has recovered 17.4 million, or 78%, of the 22.4 million jobs lost during the depths of the pandemic in the spring of 2020. That leaves the nation 5 million jobs below its pre-crisis level.

The September report likely captured a labor market still healing from a soft patch after disappointing job gains in August followed blockbuster advances the prior two months, economists said.

For example, the reopening of most schools for in-person learning was set to spark a return to work for many teachers, janitors and other staffers, Goldman Sachs economist Spencer Hill wrote in a research note. But employment in public and private education fell by 180,000 after seasonal adjustments because hiring wasn’t as strong as it has been historically.  Some schools are still conducting a hybrid of remote and in-person learning amid the COVID surges.

The reopenings also were likely to allow some parents who had been caring for their kids to rejoin the workforce, says economist Lydia Boussour of Oxford Economics.

And the phaseout of federal unemployment benefits for millions of Americans on September 6 was likely to nudge many to intensify their job searches and land positions.

Both developments were poised to partly ease historic worker shortages that have crimped employment gains despite a record 10.9 million job openings as recently as July.

Yet the school reopenings and the cutoff of jobless benefits occurred just weeks ago and their effects were likely to play out more fully in coming months, says Ian Shepherdson, chief economist of Pantheon Macroeconomics.

Meanwhile, the spike in COVID cases, spurred by the delta variant, continued to restrain consumer activity and hiring last month. New daily COVID cases were still up nearly tenfold in mid-September – when Labor conducted its jobs survey — compared to early July. Cases, though, have declined in recent weeks and 76.2% pf people over 12 have been fully vaccinated.

As a result, job growth should strengthen in coming months.

“The (September) data, in short, will reflect a labor market in flux,” Shepherdson said in a note to clients.

BY PAUL DAVIDSON