The unemployment dropped unexpectedly from 8.1 percent in August to 7.8 percent in September, according to the Bureau of Labor Statistics (BLS). The unemployment rate stems from a survey of households, and there was a large jump in the number of employed individuals (up from 142.1 million in August to 143.0 million). With such a large increase, the unemployment rate fell. These numbers are often volatile. Time will tell if these numbers hold when the October numbers are released on November 2. We might expect for the unemployment rate to go back over 8 percent at that time.

Monthly employment changes come from a different survey of business establishments. Using this survey, significant revisions to the July and August data were behind the improvement. As you can see in the attached graphic, July’s nonfarm payrolls rose from 141,000 as they were originally reported to 181,000 according to the revision. August’s nonfarm payrolls were upgraded from 96,000 to 142,000. This suggests an increase of 86,000 workers more than originally stated. For manufacturers, the revisions show that the sector lost more jobs in July and August than we thought, with the industry adding 18,000 workers in July (instead of 23,000) and shedding 22,000 workers in August (instead of 15,000).

The larger narrative about the current state of the economy has not been altered by the lower unemployment rate. In fact, there were just 114,000 nonfarm payroll workers added in September, continuing a disappointing streak of job creation since the spring. Manufacturing lost 16,000 workers, bringing its two-month losses to 38,000 employees. With manufacturers being one of the primary drivers of growth since the end of the recession, it is hard to argue that today’s employment numbers point to strength in the current economic environment.

Looking specifically at sectors within the manufacturing industry, durable goods businesses were hit harder in September than nondurables, with both of them seeing declines (down 13,000 and 3,000, respectively). Sectors with the largest declines included computer and electronic products (down 5,500), primary metals (down 3,400), printing and related support activities (down 3,200), transportation (down 3,000, with 3,400 from motor vehicles), and miscellaneous manufacturing (down 1,500). On the other hand, there was growth in the following sectors: wood products (up 1,700), chemicals (up 1,600), and food manufacturing (up 600), along with a few others.

Despite the lower employment numbers overall, manufacturing workers did have a slight uptick in the average workweek, up from 40.5 hours to 40.6 hours (mainly from durable goods sectors). The average amount of overtime was the same at 3.2 hours. Likewise, the average weekly earnings for manufacturing workers rose from $971.60 to $976.02.

In conclusion, the employment numbers provide mixed news. While there were upward revisions to nonfarm payrolls in July and August and increased overall employment in September, the larger story is one of continued weakness. U.S. job growth has been dismal since February, and manufacturers’ employment has declined for two months in a row. With slowing global growth and uncertainties about the domestic fiscal situation paramount in many minds, the prospects for future growth in the economy are shaky at best.

Chad Moutray is chief economist, National Association of Manufacturers. 

Today’s report by the Labor Department that 95,000 jobs were shed in September while the unemployment rate remained unchanged at an elevated 9.6 percent shows that the economy is still struggling and there is much uncertainty in the private sector. Falling for a second consecutive month, for the first time since last December, manufacturing employment edged down by 6,000 in September. While manufacturers overall have added 136,000 to payrolls so far this year, the fact that 99 percent of this increase took place during the first five month of the year shows that the economic recovery is cooling, not gaining steam. This is largely because temporary forces, such as inventory restocking and several fiscal stimulus measures, have largely played themselves out. 

 The main reason for the loss of 159,000 government workers last month was because of declines in temporary Census workers employed to conduct the 2010 Census. Meanwhile, the sluggish 64,000 gain in private sector employment shows that employers remain guarded in their outlook and remain pessimistic with respect to the underlying strength of the recovery.  This is highlighted by the fact that increases in temporary employment, which rose to nearly 50,000 in January, have been edging down ever since and increased by less than 17,000 last month.

 The uncertainty about the underlying strength of the recovery coupled with possible legislative and regulatory actions coming from Washington is continuing to constrict private sector job growth which kept unemployment higher in September than it was 15 months ago when the recession ended in June of 2009.