Job Growth Slows in September

Job growth slowed in September as the Fed raises interest rates aggressively to fight inflation, but the overall labor market remains tight. The unemployment rate edged down to 3.5% as the number of persons in the labor force decreased by 57,000 in September.

Total nonfarm payroll employment increased by 263,000 in September, following a gain of 315,000 in August, as reported in the Employment Situation Summary. It marks the lowest monthly job gain in the past 17 months. The estimate for August remained unchanged, while the July increase was revised up by 11,000, from +526,000 to +537,000. In the first nine months of 2022, nearly 3.8 million jobs were created, and monthly employment growth averaged 420,000 per month.

In September, the unemployment rate decreased by 0.2 percentage points to 3.5%, returning to its February 2020 level. The number of unemployed persons declined by 261,000 to 5.8 million, while the number of employed persons increased by 204,000.

Meanwhile, the labor force participation rate, the proportion of the population either looking for a job or already with a job, edged down 0.1 percentage point to 62.3% in September. Moreover, the labor force participation rate for people who aged between 25 and 54 decreased to 82.7%. Both of these two rates are still below their pre-pandemic levels in the beginning of 2020, and are not fully recovered from the COVID-19 pandemic.

For industry sectors, leisure and hospitality (+83,000), and health care (+60,000) led job gains in September, while employment in financial activities, transportation and warehousing, retail trade, and government declined over the month.

Employment in the overall construction sector increased by 19,000 to 7.7 million in September, following a 11,000 gain in August. Residential construction gained 6,400 jobs, while non-residential construction employment gained 13,100 jobs in September. Residential construction employment currently exceeds its level in February 2020, while 84% of non-residential construction jobs lost in March and April have now been recovered.

Residential construction employment now stands at 3.2 million in September, broken down as 901,000 builders and 2.3 million residential specialty trade contractors. The 6-month moving average of job gains for residential construction was 6,517 a month. Over the last 12 months, home builders and remodelers added 110,500 jobs on a net basis. Since the low point following the Great Recession, residential construction has gained 1,192,800 positions.

In September, the unemployment rate for construction workers declined by 0.5 percentage points to 4.5% on a seasonally adjusted basis. The unemployment rate for construction workers has been trending lower, after reaching 14.2% in April 2020, due to the housing demand impact of the COVID-19 pandemic.