Job growth continued to slow in September, another sign that the labor market is cooling from its red-hot peak earlier this year, although it remains an area of strength for American economy.
Employers have been added 263,000 jobs last month, the Labor Department announced Friday in its monthly jobs report, down from August and after months of strong job growth that has defined the economy of recovery from the pandemic. It is the lowest monthly increase since April 2021.
The unemployment rate fell to 3.5 percent, returning to the level of February 2020, before the pandemic.
Although other economic indicators worsened in recent months, the labor market continued to boom. But the job outlook is changing, with workers seeing moderate wage growth and employers slowing hiring in anticipation of a sales slowdown.
“Employers are hiring primarily for replacement rather than growth and expansion, and are focusing on essential roles,” said ZipRecruiter economist Julia Pollak. “But when push comes to shove, they still have to hire because they’re still seeing customers coming in the door and healthy sales.”
Before Friday’s report, Wall Street forecasters had forecast a September figure of 250,000 jobs added.
The largest job gains were seen in leisure and hospitality, with 83,000 jobs added in September, one of the few sectors not yet back to pre-pandemic levels: the industry is still 1.1 million of jobs below the level of February 2020. Health care increased by 60,000 jobs, with strong gains in hospitals and ambulatory health services.
Professional and business services added 46,000 jobs. Temporary help services added 27,000 jobs. Losses in the temporary industry are often an indicator of economic downturn.
Manufacturing, construction and wholesale trade continued to experience strong growth. Transportation and storage, retail, government and mining showed little change. Employment in financial services decreased slightly.
Nick Bunker, director of US economic research for Workplace Indeed, said a slowing labor market should not cause alarm.
“We have to change our expectations,” Bunker said. “The gains at the beginning of the year were astronomical, because we were in a very, very big hole in terms of jobs, and now we’re getting to something close to full employment.”
Anxieties have flared over a possible crash as the stock market has tumbled, inflation has soared and the housing market has cooled. Nearly two-thirds of economists recently surveyed by Bankrate, a consumer financial services firm, predicted a recession by mid-2024.
The Federal Reserve has warned that households and the labor market will experience some pain, officials say continue to raise interest rates to moderate demand and thus reduce inflation. So far, the labor market has remained resilient, but it is too early to see the full effects of the Fed’s monetary policy.
Other indicators suggest the Fed is achieving its goal of easing the labor market without widespread layoffs.
Average hourly earnings continued to rise, but at a slower pace of 0.3 percent this month, to $32.46 an hour. Slower wage growth suggests that low-wage workers, in particular, are suffering more from inflation, while employers have been able to attract workers without raising wages further.
“To the extent that employers already raised wages earlier this year, those higher wages are still working to attract workers,” said Elise Gould, senior economist at the Economic Policy Institute, a think tank. from the left “Wages are not falling, but they are not increasing at the same rate.”
The labor force participation rate was little changed at 62.1 percent, an area where economists had expected to see more growth to ease labor shortages.
Employers had 10.1 million job openings in August, down 10 percent from the previous month, according to a Labor Department report released Tuesday.
The continued tightening of the labor market has allowed workers to flex their muscles to demand better wages and working conditions. Last week, a three-day strike at San Francisco International Airport led to $5-an-hour raises for about 1,000 food service workers. Meanwhile, Amazon faces a union election next week at a warehouse near Albany, New York, which could lead to the second unionized store in the e-commerce giant’s vast logistics empire. (Amazon founder Jeff Bezos owns The Washington Post.)
But workers’ wage gains are still being wiped out by high inflation, which has disproportionately affected low-income households that spend a larger share of their income on food and housing, where prices have continued to rise sharply.
Jamika Ruffin, 29, earns $10 an hour as a cashier at a McDonald’s in Detroit, after seven years at the fast-food chain. He received a 25-cent raise in January, but said that increase hasn’t gone far.
“We’re not living on those salaries,” Ruffin said. “We are surviving. The cost of living has gone up a lot this year.”
Ruffin said she can’t always pay her phone bill and has to borrow money so her daughter can go on field trips with her school. And at the end of the month they visit social canteens to eat.
Recent changes in the labor market have helped some employers.
Jeff Ulmer, the owner of Action Hardware in Wilmington, Del., said he’s finding it easier to hire after months of struggling to compete with larger employers for retail workers. High school students, he said, could find jobs elsewhere starting at $15 an hour, far more than they could afford to pay.
“We’ve had more luck recently,” Ulmer said. “The power between the owner and the employees had shifted, but it’s starting to come back the other way.”