US September ‘s Jobs Report Disappoints, But The Real Fear Lies In Inflation

Last Friday, the US Bureau of Labor reported adding 194,000 jobs in September, falling short significantly compare to 500,000 analysts expected.

While the unemployment rate has fallen to 4.8%, the lowest since March 2020. There has not been any significant progress made in the labor market. The Bureau of Labor reported temporary layoffs have not changed since the previous month, the number of persons not in the labor force who currently want a job was 6.0 million in September, also unchanged from the previous month. And in September, the number of persons employed part-time for economic reasons, at 4.5 million, was also unchanged. On the other hand, significant declines have been reported from long-term unemployment and permanent job losers.  

What has been improving this year is non-farm payroll employment, which has risen 561,000 on average per month this year, but September’s non-farm payroll jobs have also been a disappointment.  

 

Leisure and hospitality sector only added 74,000 jobs, far below the industry’s monthly average gain of 197,000 in 2021. Other sectors such as transportation, manufacturing, mining as well as utility have seen slow growth or small decline. Notably, government employment lost 123,000 jobs compared to the previous month. Employment in public education also declined over the month and local government education lost 144,000 jobs, roughly 17,000 jobs lost for state government education on a seasonally adjusted basis.

The insufficient labor forces in the transportation, manufacturing, and education sectors mean that there will be continuous shortages of supplies for distribution nationwide, which explains some of the food shortages in schools and empty shelves in the stores and malls people experienced lately.

CBS Los Angeles reported one woman said her grocery bill has been slowly climbing over the past few weeks.“ The prices are just so high,” she said. She’s not alone.

 

“ Everything just seems to be a dollar to two dollars higher,” said shopper Kathleen Postal. “ This creep has just happened and it’s very expensive.”

 

The fear of inflation is coming to the place. While the US official inflation data for September due this Wednesday has not yet been released, there are some serious concerns about where is inflation headed. The wholesale inflation according to the labor department is up 8.3 percent since August.

 

Gas prices in the US are trending higher in monthly reports. With the effects of the hurricane and OPEC’s meager production growth,  the average price for heating oil, WTI crude, natural gas prices in the US and around the globe are much higher comparing to the month of August. The trend has also been accelerated in the first week of October. 

With energy prices near historical high, while wholesale prices continue to jump, and labor shortages due to persistent Covid 19 pandemic,  it is looking very worrisome on the forecasts of inflation.

One thing to remember is unemployment has been shifted from permanent job losses to temporary layoffs from the September job reports, but if the supply crisis worsens, and inflation surges higher, these job gains are going to be wiped out soon. If history has taught us anything is stagflation, hyperinflation will lead to the decline of consumer confidence, slow growths, business shutdown, and layoffs.

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