Continued growth is necessary to draw more into the labor market

The takeaway:After several months of sluggish job growth, Ohio saw substantial gains in September. At the same time, unemployment remains stubborn at 4.5%, due to another influx of Ohioans entering the labor force. Inflation fell to 2.4% in September, down 0.1 percentage points from August, maintaining the downward trend in inflation we’ve been observing since March. September’s gains, along with cooling inflation and the Federal Reserve’s apt decision to cut interest rates, offer an optimistic outlook for Ohio’s economy.

Ohio saw a large increase in job seekers entering the workforce in September, following a significant dip in new job seekers in August, compared to the peak in July. Strong growth in Ohio’s workforce in September was met by equally strong employment gains, leaving the unemployment rate unchanged at 4.5%. Employers must continue adding jobs to keep pace with Ohioans’ demand for work; the Fed’s rate cuts should help accelerate the job growth we’ve seen in 2024.

The numbers: Seasonally adjusted data released today by the Ohio Department of Job and Family Services (ODJFS) show that Ohio gained 13,500 jobs last month, demonstrating significant growth from a downwardly revised 5,662,100 jobs in August to 5,675,600 in September. Monthly numbers are preliminary and subject to revision. August’s revision indicates job losses were more severe than originally estimated, although substantial growth in September made up for it and more, suggesting Ohio’s economy may be back on course.

“Strong job gains in September mirror national employment trends, which exceeded expectations last month,” said Molly Bryden, researcher with Policy Matters Ohio. “Recent growth alleviates broad concerns around a weakening labor market, and as the Fed continues to lower interest rates, Ohioans can remain hopeful in a robust, resilient economy. Though it’s too soon to attribute this month’s employment gains to the Fed’s interest cuts, we should expect to see continued economic growth as employers begin to respond to greater borrowing power supported by lower interest rates.”

The details: Ohio saw consistent growth across industries in September, adding 5,500 jobs in the goods-producing industry, 4,000 in the service industry, and 4,000 in the public sector. Construction jobs increased by 6,700 in September, driving solid growth in goods-producing jobs, despite losses in manufacturing jobs (-1,200). Within the manufacturing sector, nondurable goods manufacturers shed 1,800 jobs, only partially offset by the addition of 600 durable goods manufacturing jobs. Most service-providing sectors saw modest growth, contributing to net gains in the service industry, with small losses in the information sector (-500), private educational and health services (-200), and other services (-500). In the leisure and hospitality sector, accommodation and food service employers added the most jobs (+1,600). The addition of 5,700 local government jobs propelled growth in the public sector, while state government jobs fell by 1,600 and federal government jobs by 100.

“Consistent gains in construction jobs are a good sign,” said Bryden. “We’re hopeful recent fiscal policy decisions can reverse the downward trend in manufacturing jobs over the past few months. Interest rate cuts offer an opportunity to mitigate the contraction in the manufacturing industry – which has a large presence in Ohio – that we’ve observed this year.”

Despite broad growth across sectors, we continue to monitor public sector employment. According to Bryden, “Unlike the recovery in local and federal government jobs, state government employment still lags pre-pandemic levels. This recovery is critical to effective and efficient delivery of essential public services. It’s important to keep an eye on state government employment, especially as Ohio’s legislators continue to propose expensive tax breaks for the wealthiest Ohioans, losing out on state revenue at the expense of the average taxpayer.”

The household survey: The separate household survey showed the number of Ohioans unemployed hovered at 263,000 with an unemployment rate of 4.5%, remaining unchanged from August. In September, employment gains kept pace with the expanding labor force, as 14,000 Ohioans gained jobs and 14,000 entered the workforce to seek a job. The gap between Ohio’s unemployment rate and the national rate widened slightly, as U.S. unemployment fell to 4.1% in September, down 0.1 percentage point from August.

Ohio’s labor force has seen substantial growth in 2024, with an average of 9,200 new job seekers each month. After the number of Ohioans entering the workforce peaked in July (+22,000), only 3,000 job seekers joined the workforce in August, generating concerns about Ohioans’ faltering confidence in securing a job. By contrast, the number of new job seekers increased by 14,000 in September, more closely resembling trends we’ve observed starting in April, signaling job seekers may be regaining their confidence in the job market. However, unemployment remains stuck at 4.5% for the third consecutive month, indicating hiring trends must shift to meet Ohioans’ demand for work.

Recent interest rate cuts and falling inflation provide employers with greater financial capacity to build out Ohio’s workforce, while easing the pressure on working Ohioans’ budgets.

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