This is quite a deflating report. The hope was that August was an anomaly but the fact is, the delta variant was still with us in September. One optimistic interpretation is that COVID-19 case counts are receding, so future months should be stronger. But the reality is that we are still in a pandemic.
The unemployment rate did drop, but that decline did not necessarily translate into more people finding a job. The employment-to-population ratio only increased by 0.2 points while the labor force participation rate dropped by 0.1 points. The situation was more disappointing for prime-age workers (those ages 25 to 54) who did not see any increase in their employment rate.
Job growth in the leisure and hospitality sector did pick up in September, but only to 74,000 jobs. Though the sector was adding over 400,000 jobs a few months ago, employment is still down 9.4% from its pre-pandemic level. Getting the pandemic behind us will help the economy overall, but its impact will be most apparent in leisure and hospitality.
This year has been one of false dawns for the labor market. Demand for workers is strong and millions of people want to return to work, but employment growth has yet to find its footing. Hopefully the current decline in COVID case counts continues. That seems to be the only way out of our current situation.