U.S. nonfarm payrolls were lower than expected, up 661,000 in September versus expectations of 859,000. However, payrolls for July and August were revised up by a total of 145,000. On a trailing 3-month basis, payrolls have increased an average of about 1,304,000 per month. While these gains are impressive relative to long-term historical trends, the US labor market is a long way from recovering the payrolls lost in the early stage of the pandemic. The unemployment rate declined to 7.9% in September (versus expectations of 8.2%) from 8.4% in August. The decline in the unemployment rate was better than expected, however, it was partially driven by a decline in the labor participation rate to 61.4% in September from 61.7% in August. The labor participation rate improved modestly after plunging to 60.2% in April, but remains near the lowest levels since the 1970’s. Nearly 4.5 million people have dropped out of the labor force since January, and 12.6 million people in the labor force were unemployed in September, according to the U.S. Bureau of Labor Statistics household survey. Workers who classified themselves as employed but absent from work in the September survey understated the unemployment rate by about 0.4%. The U-6 underemployment rate, which includes those who are marginally attached to the labor force and employed part-time for economic reasons, remained high but eased to 12.8% in September from 14.2% in August.