Video PlayerClose

WASHINGTON, Oct. 2 (Xinhua) -- September saw the smallest hiring gains since the pandemic-ravaged labor market started to recover in May. With more layoffs turning permanent, the U.S. economy faces a long, bumpy road to full recovery.

U.S. employers added 661,000 jobs in September, pushing the unemployment rate down by 0.5 percentage point to 7.9 percent, the Labor Department's Bureau of Labor Statistics (BLS) reported Friday.

This compares to an upwardly revised 1.49 million jobs gains in August, when the unemployment rate fell by 1.8 percentage points to 8.4 percent. Employment growth peaked in June with a record job growth of 4.8 million.

"This is a very disappointing jobs report, suggesting that the rebound from the early, temporary layoff from COVID-19 are nearing their end," said Michael Hicks, director of the Center for Business and Economic Research at Ball State University in Indiana.

"The bulk of remaining joblessness, and the historical decline in labor force participation remain significant barriers to economic recovery," Hicks said.

The BLS report showed that labor force participation rate, which saw an increase in August, decreased by 0.3 percentage point to 61.4 percent in September, which is 2.0 percentage points lower than in February.

Meanwhile, the number of permanent job losers increased by 345,000 to 3.8 million in September, the bureau noted, adding that this measure has risen by 2.5 million since February.

"Along with the drop in the participation rate, the rise in permanent job losers suggests an arduous recovery as workers' ties to employers and the labor market weaken more broadly," Sarah House, senior economist at Wells Fargo Securities, wrote in an analysis.

Roughly 22 million people were laid off in March and April amid COVID-19 shutdowns, pushing up the unemployment rate to double digits. Even with the September data, payrolls are more than 10 million below pre-pandemic levels.

Peterson Institute for International Economics (PIIE) senior fellow and Harvard professor Jason Furman, and Harvard Kennedy School research associate Wilson Powell argued that the newly released official unemployment rate understates the level of joblessness by 1.7 percent.

In an analysis published Friday, the two experts noted that an extra 773,000 people who were "not at work for other reasons" were counted as employed, and 4.4 million people have left the labor force since February, which means "realistic unemployment rate" was 9.6 percent in September.

The median projection for the unemployment rate is 7.6 percent at the end of this year, and 4 percent by the end of 2023, according to the Federal Reserve's latest economic projections. This is still above the historic low of 3.5 percent the country experienced before the COVID-19 pandemic.

The monthly employment report came one day after the release of weekly jobless claims report, which showed that first-time filing for state unemployment benefits dropped by 36,000 to 837,000 last week, marking the sixth time in the past 28 weeks that the number had come in below 1 million.

The total number of people claiming benefits in all programs -- state and federal combined -- for the week ending Sept. 12, however, increased by 484,856 to over 26.5 million, indicating the continued significant disruption in the labor market.

House noted that the monthly employment report is somewhat more backward looking than usual due to the fast-moving nature of the pandemic and relatively early survey period.

"A wave of high-profile mass layoff announcements in recent days and stubbornly high jobless claims suggest the speed of the recovery is likely to downshift even further in the coming months," said the Wells Fargo economist.

She added the weaker pace of labor market earnings as well as reduced jobless benefits will be a "headwind" on consumer spending in coming months and whittle down savings further.

According to a Bureau of Economic Analysis report released Thursday, U.S. personal income decreased 2.7 percent in August, following the expiration of the extra 600-U.S.-dollar per week unemployment benefits.

The federal unemployment benefits -- part of a 2-trillion-dollar relief package approved by Congress in late March -- expired at the end of July, but lawmakers remain deadlocked on the next round of relief.

Some states have started issuing a 300-dollar weekly supplement to unemployment benefits, based on President Donald Trump's order to extend extra unemployment benefits issued in early August after relief talks collapsed.

The Democrats-controlled House of Representatives on Thursday night passed a 2.2-trillion-dollar COVID-19 relief bill, despite that the Trump administration has only offered a 1.6-trillion-dollar package.

House Speaker Nancy Pelosi and Treasury Secretary Steven Mnuchin talked on the phone Friday afternoon and discussed "areas of disagreement," according to Pelosi's spokesman Drew Hammill, who added that "discussions will continue."

Economists, as well as Federal Reserve officials, have argued that more fiscal relief is needed to sustain the economic recovery, warning of dire consequences if further fiscal support is not provided in time. Enditem