The payment: The economy created a stingy 194,000 new jobs in September, marking the second disappointing monthly surge in a row, suggesting that a labor shortage could thwart a robust rebound in the US economy in the coming months.
The surge in new hires was well below Wall Street projections, compounded by a decline in public school employment. Economists polled by the Wall Street Journal had forecast 500,000 new jobs.
The private sector added 317,000 workers last month, but state and local employment fell by 123,000.
The unemployment rate meanwhile fell from 5.2% to 4.8% and reached a new pandemic low.
The black unemployment rate fell almost a full percentage point to 7.9%, which was much of the decline.
But economists estimate that the official rate underestimates true unemployment by a few percentage points.
The economy created 194,000 new jobs in September to bring the unemployment rate down to 4.8%, but the US faces a major labor shortage.
Olivier Douliery / Agence France-Presse / Getty Images
Worse still, the number of people in work actually fell by 183,000 in September, partly explaining the sharp drop in unemployment.
The proportion of people in employment fell slightly to 61.6%, almost 2 points below the pre-crisis high.
One of the biggest problems facing the economy right now is attracting enough people to return to work. Many companies lack the staff to produce enough goods and services to keep up with demand.
September's tepid job report adds to the mounting evidence that the recovery has slowed, but it likely won't stop the Federal Reserve from announcing plans anytime soon to wean the economy off its easy money strategy.
Read: Economists see a growing chance of an earlier rate hike by the Fed
US stocks rose in trading early Friday.
Big picture: The pace of the economic recovery may largely depend on the return of many workers to work in the months ahead.
Record job vacancies in the US show that there is a great demand for labor. And as the delta begins to dwindle, more companies may be ready to hire.
“There is no shortage of workers. Companies want to hire, ”said Senior Econom Will Compernolle from FHN Financial Markets.
Read: The Economy Will Recover When The Delta Abates, But Bottlenecks Are Still A Major Concern
The problem is that the workforce is short of up to 6 million people who would likely be working now if there had never been a pandemic.
What could get more people back to work soon is the end of additional federal benefits for the unemployed and the reopening of most schools for face-to-face learning. But it will be several months before they see if they come back – and how quickly.
Read: US jobless claims drop 38,000 to 326,000 as the labor market improves
Key data: Employment grew the most in the past month in leisure and hospitality companies that have been most sensitive to the coronavirus. Hotels, theaters and the like created 74,000 new jobs.
However, that's only a fifth of the average spring industrial employment increase, suggesting that the spike in coronavirus delta cases in late summer held back hires in September.
The number of employees increased by 60,000 for commercial companies, 56,000 for retailers and 47,000 for transport companies that deliver goods to customers.
The number of new jobs also rose slightly in manufacturing and construction.
The only sector that reported a significantly lower level of employment was the state, especially in public education. The decline in school employment reflects quirks in seasonal attitudes related to the pandemic rather than broader problems with the economy.
By and large, the economy is expanding fairly quickly, but the labor shortage threatens to put the US on a slower growth path and fuel the biggest rise in inflation in 30 years. Most companies raise wages to attract workers or to poach them from rivals.
The average wage rose 19 cents to $ 30.85 an hour, up from 4% to 4.6% last year. Before the pandemic, wages rose at a more leisurely 3% per year.
But higher inflation is eating away most, if not all, of those wage increases.
Prices are up 5.3% over the past year using the more popular consumer price index. And that's up 4.3% over the past 12 months using the Fed's preferred inflation meter for consumer spending.
Another step that companies have taken to address labor shortages is increasing overtime.
The average American working hours rose two-tenths of a percentage point to 34.8 hours per week. Before the pandemic, the length of the working week had never been this long.
The August attitude, meanwhile, was not quite as weak as it initially seemed.
The government revised its estimate of how many new jobs were created from 235,000 to 332,000. However, this is still well below the average increase in spring.
What do you say? "Labor demand remains robust, but a combination of factors continues to prevent higher job creation," said Jim Baird, chief investment officer, Plante Moran Financial Advisors.
"Hopefully the current decline in Covid case numbers will continue," said Indeed Hiring Labs director Nick Bunker. "That seems to be the only way out of our current situation."
Market reaction: The Dow Jones Industrial Average
and S & P500
rose slightly in Friday trading after an up and down in the trading day.