The United States added a less-than-expected 661,000 jobs in September but the unemployment rate fell to 7.9 per cent, the Labour Department said on Friday, underscoring the economy’s tortured recovery from COVID-19.

The positions gained last month were less than half of the upwardly revised nearly 1.5 million positions added in August, indicating a slowdown in the pace of the employment recovery after business shutdowns beginning in March to stop COVID-19 caused mass layoffs.

“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,” the Labour Department said. “Employment in government declined over the month, mainly in state and local government education.”

The fall in the unemployment rate from 8.4 per cent in August was more than expected, but also betrayed signs of Americans’ continued struggles to find work.
The labour force participation rate declined 0.3 percentage points to 61.4 per cent, erasing August’s gains. The number was two points lower than its level in February before the pandemic struck.

Labour force participation rate declined 0.3 percentage points to 61.4%

The Labour Department also acknowledged the impact of a classification error, which means the unemployment rate could be understated by as much as 0.4 percentage point.

Daniel Zhao, economist at recruitment website Glassdoor, credited the improvement in the unemployment rate to the 1.5 million drop in people indicated as being on temporary layoff.

However, he said the 345,000 increase in permanent job losses shown in the report is a bad sign, and the report overall “confirms evidence of slowing but continuing recovery over last few months”.