September jobs report: What to know about 29,000 jobs and 4.2% unemployment

Forecasts reported before the release were higher, though they were not identical. CBS News and AP cited an expectation of 90,000 jobs; Courthouse News Service cited 84,000. Neither figure was an official BLS target. September’s gain was also below the 45,000 average monthly increase over the preceding 12 months.

Earlier estimates weakened, too. BLS revised July from a gain of 21,000 jobs to a loss of 10,000, and August from a gain of 162,000 to 133,000. Together, those revisions cut the two months’ previously reported payroll total by 60,000. BLS said revisions reflect additional employer reports and recalculated seasonal factors.

Health care added 17,000 jobs in September, compared with an average monthly gain of 33,000 over the prior 12 months. For someone looking for work, a national net gain says little about whether an opening exists in their field. The payroll figure describes where employment stood overall, not each applicant’s prospects.

How can payroll jobs rise while unemployment ticks up?

The two figures come from different surveys. BLS estimates nonfarm payroll employment from a survey of businesses and government agencies. It calculates the unemployment rate from a survey of households that classifies people by whether they are working, unemployed or outside the labor force.

The unemployment rate counts unemployed people as a share of the labor force, not as a share of everyone in the country. Under BLS rules, a person generally must have no job, be available for work and have actively sought work in the previous four weeks to count as unemployed. People on temporary layoff are an exception to the search requirement.

A net increase in payroll jobs therefore does not mean everyone seeking work found it. Nor does a higher unemployment rate, by itself, explain what happened to employer hiring. The surveys count different things, and the September release does not establish why the measures moved as they did.

The size of the change matters. BLS described both payroll employment and the unemployment rate as changing little in September. The 4.2% unemployment rate remained within the 4.1% to 4.3% range recorded since March. That context does not erase the weak payroll gain; it prevents one month’s small rate increase from being mistaken for proof of a sustained rise in joblessness.

Who is left out of the 4.2% unemployment rate?

BLS counted 7.1 million unemployed people in September, a total it said changed little from August. It separately counted 5.8 million people outside the labor force who said they wanted a job. Those people were not classified as unemployed because they had not recently searched for work or were unavailable to work under the survey’s rules.

That distinction matters to anyone using the headline rate to judge how easily people can get a job. The 5.8 million are not part of the official unemployment count, but their stated interest in work is part of the labor-market picture. A low rate alone cannot tell policymakers how many people want work without meeting the survey’s definition of unemployed.

The national rate also hides differences among groups. The unemployment rate for Black workers rose from 6.0% in August to 7.0% in September, while BLS said rates for several other listed groups changed little. That one-month change deserves attention, but it does not, on its own, establish a longer-term trend or its cause.

What can’t September’s jobs report tell us about pay and the economy?

BLS reported average hourly earnings of $37.81 for private nonfarm employees in September, up 3.0% from a year earlier. That is wage growth in dollars, not a finding that workers can buy more with their pay. Assessing purchasing power requires inflation data for the same period, which these employment figures do not supply.

The report also cannot settle the Federal Reserve’s next interest-rate decision. Ken Mahoney, CEO of Mahoney Asset Management, told CBS News that the labor figures did not make a case for an October rate increase; in his view, inflation data would have to drive such a decision. His assessment underscores the limit of treating a jobs report as a complete account of the economy.

Steve Rick, chief economist at financial services firm TruStage, told CBS News: “One month doesn't make a trend, and monthly payroll numbers can bounce around quite a bit.” That caution applies to the initial September estimate as well as the unemployment-rate change: Earlier payroll numbers were revised, and later reports will provide more evidence about whether hiring remains weak.

BLS has scheduled the October employment report for Nov. 6. It will offer another reading on payroll jobs and unemployment, though September’s figures alone cannot say what that reading will show.