The unemployment rate declined by 0.5 percentage points to 7.9 percent in September, the U.S. Bureau of Labor Statistics reported Friday, as employers added 661,000 jobs, including 2,200 in accounting and bookkeeping.
The labor market improvements reflected the continued economic recovery despite the novel coronavirus pandemic and efforts to contain it. However, stocks fell sharply Friday after news Thursday night that President Trump and First Lady Melania Trump have both tested positive for COVID-19.
Debbie Brackeen is the chief strategy & innovation officer at CSAA Group. She leads the organization in strategy, partnerships, innovation and venture investing. She has more than 25 years of experience and leadership at innovative high-tech companies, including Apple, Sun, HP, and eBay, and, most recently, served as the global head of innovation at Citigroup. She has served as an adviser to the Astia Technology Committee since 2008, and was an adviser on the corporate board of the National Venture Capital Association. Ms. Brackeen earned a degree in American Studies from Stanford University and has completed executive programs at the Northwestern Kellogg School of Management, INSEAD and the Stanford Graduate School of Business.
Charles Meyer is the former Chief Legal Officer of Research In Motion Ltd. (now BlackBerry) and is a practicing attorney in Texas.
In September, notable job gains occurred in leisure and hospitality, in retail trade, in health care and social assistance, and in professional and business services, such as accounting and tax preparation. Employment in government declined over the month, mostly in state and local government education, even though schools have been reopening around the country despite the pandemic.
Professional and business services added 89,000 jobs in September, but most of those gains occurred in services to buildings and dwellings (22,000 jobs), architectural and engineering services (13,000 jobs), and computer systems design and related services (12,000 jobs). Despite gains of 910,000 jobs since April, employment in professional and business services is 1.4 million lower than in February.
In terms of small businesses, Top 100 Firm CBIZ reported Friday that its CBIZ Small Business Employment Index saw significant growth, with a seasonally adjusted increase of 1.5 percent for September. Hiring historically winds down in September, CBIZ noted, as summer comes to a close and businesses scale back their headcounts. The upswing in September underscored the current volatile employment picture.
“For the CBIZ metric, we saw some solid hiring in September, which is a little surprising in the small-business sector,” said executive vice president Philip Noftsinger. “As we cut through the data, we’ve broken our more than 3,000 payroll clients into states that opened earlier versus later. Unlike the early summer, where a lot of the gains were driven by states that opened earlier, actually what we saw in September was that there were larger gains in states that opened later. What we may be seeing here is some of that slack in those later states lifting some of the small-business numbers that we’re seeing in our data.”
All four regions tracked by the CBIZ SBEI saw growth in September. The Central region showed the most growth at 1.55 percent, followed by the Southeast at 1.39 percent, the West at 1.27 percent and Northeast at 0.79 percent. While hiring increased mildly among states that opened on or before May 15 at 0.72 percent, it increased more robustly among states that opened after May 15 at 1.6 percent.
On an industry basis, the CBIZ SBEI indicated mixed results. The transportation, information, educational services and health care industries showed notable hiring growth, but hiring decreased in real estate, retail trade and professional services.
“In the area of accounting and tax and advisory, the professional services bucket is where you would find those businesses, and oddly that one was down in September,” said Noftsinger. “It’s possible that because of the extension in the filing deadlines in September and August, some of those resources were either benched or furloughed, so that may be what’s occurring there in the field, and that’s reasonable.”
He sees mixed signals in the BLS jobs report. “Turning to the Bureau of Labor Statistics, the headline number, unemployment, went down, but I think that’s a bit of a head fake because the labor participation rate dropped by 0.3 percent, which is a pretty big move,” said Noftsinger. “That may indicate that some workers out there are starting to lose hope. I saw that in the 2009 timeframe as well, where the labor participation rate would give you a false positive on the unemployment number. We’re continuing to climb back, but with each month the job gains get a little slower. We were expecting 800 and some, and we got 600 and some, so I think it’s continuing to be a bit of a fight to get back to where we were in January and February.”
On Thursday night, the House passed a scaled down $2.2 trillion version of the $3-plus trillion HEROES Act stimulus package that it originally passed in May, but House Democrats remain far apart from the Trump administration and Senate Republicans, who believe it should be closer to $1 trillion. House Speaker Nancy Pelosi, D-California, and Treasury Secretary Steven Mnuchin are continuing to negotiate over issues such as support for state and local governments.
“The House passed the next potential support bill, of $2.2 trillion, and I think it’s very important,” said Noftsinger. “I do think we‘re going to need another support mechanism in terms of fiscal policy to fight through this. Otherwise the long-term damage could be far greater. I’m hopeful that will find its way to the president‘s desk.”
Rep. Richard Neal, D-Massachusetts, chairman of the tax-writing House Ways and Means Committee, criticized the Trump administration and Senate Republicans for not agreeing on extending enhanced unemployment benefits, the Employee Retention Tax Credit and other stimulus measures. “The inaction of the Trump Administration and Senate majority is especially troubling, as many CARES Act provisions — even those with broad bipartisan support — are on track to expire at the end of this year,” he said in a statement Friday in reaction to the jobs report. “For instance, the Employee Retention Tax Credit, which encourages employers to rehire and to keep their employees on payroll, is slated to end on Dec. 31. Among those who reported in September that they were unable to work because of pandemic-related closures or lost business, 10.3 percent received at least some pay from their employer for the hours not worked – the exact type of assistance that the ERTC incentivizes. Both HEROES Acts contain an expanded ERTC, but both are languishing in the Senate.”
His Republican counterpart on the committee, ranking member Kevin Brady, R-Texas, blamed Pelosi and the other Democrats for not coming to an agreement with the GOP on a smaller stimulus package. “America will take a 661,000 jobs report every chance we can, especially as unemployment again beat expectations, dropping to 7.9 percent,” he said in a statement. “This is the fifth consecutive month of job growth in the best labor market recovery from any economic crisis in history. But we’re not out of this pandemic yet, so it’s crucial Speaker Nancy Pelosi stop sabotaging this economy for political gain, and find common ground on a targeted, smart emergency aid package that focuses on saving small businesses, getting people back to work, and more funding for schools, hospitals and daycare.”
