Photograph by Nathaniel St. Clair

The data nerds among us were happy to finally get their September jobs report fix, even though these data are somewhat stale now. However, we still learned a few things about the state of the economy.

Before saying what we learned, it’s worth a few words on what we didn’t learn but people are saying anyway. First and foremost, this was not a strong report in any real-world sense of the term.

To be clear, the 119,000 jobs reported for the month was stronger than most analysts had expected, including me. But this hardly implies robust job growth. We averaged 170,000 jobs a month in 2024, so now we’re supposed to be celebrating a report showing job growth that is 70 percent of last year’s average?

But it gets worse. The prior two months’ data were both revised down. The average growth for the four months ending in September was less than 40,000. Furthermore, almost all the growth was in healthcare. Since May, the economy has added 174,000 jobs. The healthcare sector added 157,000 jobs, accounting for more than 90 percent of job growth over this period.

The job growth number for September is also likely to be revised downward. The direction of revisions tends to be autocorrelated. If the prior month was revised downward, then it’s better than a 50 percent chance this month’s number will be revised downward. When we get revisions for September in a few weeks, we will likely be looking at a lower number than 119,000.

Sectors that Are Not Growing

While healthcare continues to add jobs at healthy pace, although down from its 56,000 monthly average in 2024, most other sectors are not. Notably, manufacturing, which has been a main focus of the Trump administration, is shedding jobs. It lost 6,000 jobs in September; employment is down 49,000 since January.

Mining is also shedding jobs. The sector lost 2,000 jobs in September, pushing employment 8,000 below its January level. One of the many things that Trump seems to not understand is that if oil prices are low, oil companies don’t want to drill baby drill. With the current price hovering near $60 a barrel, drilling is unprofitable in many areas.

Construction employment was at least moving in the right direction, adding 19,000 jobs. But this just took employment back to its May level. Since January, the sector has created 19,000 jobs, an average of 2,400 a month. That compares to an average of 16,000 a month in 2024.

Sectors Not Growing by Design

Trump made his desire to cut federal government employment explicit and set Elon Musk to the task on his first day. The sector lost 2,700 jobs in September and is down 85,100 (3.6%) since Trump took office. Many of the workers taking Musk’s deferred departure were still on payroll through September. This should mean there will be a sharp fall in the October data.

Employment growth in state and local governments has also slowed considerably. Budget cuts at the federal level are playing a big role in stressing state and local governments. They have created 91,000 jobs since January, an average of 11,400 a month. That is down from a rate of almost 34,000 a month in 2024.

The category, “scientific research and development services” has lost almost 20k jobs this year (2.0 percent). It had been growing modestly, adding 6,400 jobs in 2024.

One final point on job........

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