Why is the growth in the US September jobs report so poor?

Announced on Friday, the Labor Department announced the September figures for the unemployment rate and jobs created. The headline is that there were just 194,000 jobs created in the month of September, one of the lowest of 2021. The Dow Jones had estimated there would be 500,000 new jobs, already a low estimate compared to previous months, but this target has been missed.

“This is quite a deflating report,” said Nick Bunker, economic research director at jobs placement site Indeed. “This year has been one of false dawns for the labor market. Demand for workers is strong and millions of people want to return to work, but employment growth has yet to find its footing.”

It bodes poorly for the economy as the country heads towards winter and with a high number of Americans unvaccinated there are still risks of business restrictions from covid-19.

But one positive is the decrease in the unemployment rate, falling four percentage points to 4.8%, the lowest since the beginning of the pandemic. Expect the Democrats to laud this number, while ignoring discussing the long-term impact of low job growth.

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How does it compare with previous months?

From a high in July with 943,000 new jobs created, and a promising 850,000 created the month prior, there has been a sharp tail off. August surprised a lot of commentators by returning just 235,000 new jobs, when 725,000 were expected. President Biden blamed the low number on the resurgence of covid-19, powered by the Delta variant.

The only comparable jobs growth of 2021 is that of January, which created a paltry 49,000 jobs off the back of 140,000 job losses in the holidays of 2020. It means the workforce is still down by more than 3 million people compared to pre-pandemic levels.

Why is the number so low?

In its summary, the Labor Department outlined some of the reasons why they believed the jobs report was so poor.

Describing employment changes as "challenging to interpret" due to the impact of the pandemic, the report states one of the reason for the poor growth was the lack of take up in the education sector. As children go back to school in August and September, this is traditionally one of the prime times for increases in employment figures.

This could point towards the impact of the pandemic still affecting worker decisions. While more than 56 percent of Americans are now fully vaccinated, not counting incoming third doses, schools have many people of the age who are not vaccinated. This could be deterring workers.

There had been an expectation that an end to the extra unemployment benefits on Labor Day would lead to people being forced into the workplace, but this is clearly not based in evidence.