South By North Strategies, Ltd.

CHAPEL HILL (October 5, 2012) – The national labor market added 114,000 more jobs than it lost in September. That payroll growth, while modest, helped to reduce the national unemployment rate to 7.8 percent, which was the lowest rate (seasonally adjusted) recorded since January 2009, when the rate also equaled 7.8 percent. Despite the improvements, job growth remained weak in September, and unemployment was elevated.

“September marked the 24th consecutive month of job growth in the United States,” said John Quinterno, a principal with South by North Strategies, Ltd., a research firm specializing in economic and social policy. “Over the past three months, the national economy has netted an average of 146,000 jobs per month, a pace that, while positive, is insufficient to drive unemployment down to pre-recessionary levels anytime soon.”

In September, the nation’s employers added 114,000 more payroll positions than they cut. Gains occurred mainly in the private sector (+104,000), though government payrolls netted 10,000 positions due to a rise in state government education jobs tied to the start of the school year. Additionally, the payroll employment numbers for July and August underwent positive revisions; with the updates, the economy gained 323,000 jobs over those two months, rather than the 237,000 positions previously reported.

Within the private sector, payroll levels rose the most in the education and health services  sector (+49,000, with 88.8 percent of the gain occurring within the health care subsector), followed by the trade, transportation, and utilities sector (+25,000, with 68.4 percent of the growth occurring in the transportation and warehousing subsector). The manufacturing, sector, meanwhile, shed 16,000 positions, of which virtually all were tied to the manufacture of durable goods. All other industrial sectors experienced few changes in payroll levels.

“The American economy has added jobs every month for two years and has netted 1.3 million positions so far in 2012,” noted Quinterno. “The current average rate of job growth nevertheless will fail to close the large jobs gap facing the United States anytime soon.”

Slack labor market conditions were evident in the September household survey. Last month, 12.1 million Americans (7.8 percent of the labor force) were jobless and seeking work. The unemployment rate was the lowest one posted since January 2009, when 7.8 percent of the labor force also was unemployed. In September, the size of the labor force grew by 418,000 persons, and the share of the population participating in the labor force rose to 63.6 percent, a rate that nevertheless was below the one recorded last September. The share of the adult population with a job similarly rose yet remained at a depressed level (58.7 percent). Nevertheless, compared to a year ago, more Americans were working in September 2012, and fewer individuals were unemployed.

Last month, the unemployment rate was higher among adult male workers than female ones (7.3 percent versus 7 percent). Unemployment rates were higher among Black (13.4 percent) and Hispanic workers (9.9 percent) than among White ones (7 percent). The unemployment rate among teenagers was 23.7 percent. Moreover, 6.7 percent of all veterans were unemployed; the rate among recent veterans (served after September 2001) was 9.7 percent. At the same time, 13.5 percent of Americans with disabilities were jobless and seeking work (not seasonally adjusted).

Jobs remained scarce in September. Last month, the underemployment rate equaled 14.7 percent. Among unemployed workers, 40.1 percent had been jobless for at least six months with the average spell of unemployment lasting for 39.8 weeks. The leading cause of unemployment remained a job loss or the completion of a temporary job, which was the reason cited by 54.3 percent of unemployed persons in September. Another 27.4 percent of unemployed persons were reentrants to the labor market, while 10.4 percent were new entrants. Voluntary job leavers accounted for the remaining 7.9 percent of the total.

“Although the unemployment rate dropped to a 44-month low, the American labor market remains in distress,” observed Quinterno. “The overall rate of job growth is sub-par, and there simply are not enough jobs for all the Americans who desire work.”

“The drop in the unemployment rate in September should not obscure the fact that joblessness in America is at a level that would have been considered a national crisis in any recessionary period prior to the most recent one.”