In September, U.S. job growth surged beyond expectations, providing reassurance about the stability of the labor market. The Bureau of Labor Statistics reported that employers added around 254,000 jobs, far exceeding the forecast of 140,000 and significantly higher than August’s revised total of 159,000.
The unemployment rate fell to 4.1% from 4.2%. Economist Brian Bethune highlighted this strong rebound as a sign of an expanding economy, increasing the chances of a soft landing that can control high inflation without causing a recession.
Service Sector Roars with 202K Job Gains in September as Fed’s ‘Monster’ Report Eases Labor Market Worries
Most of the job gains came from the service sector, particularly in health care and leisure and hospitality, which together accounted for 202,000 new positions. In contrast, the goods-producing industries had mixed results; while construction added 25,000 jobs, manufacturing saw a slight decline of 7,000 jobs.
As the Federal Reserve closely monitors employment data to protect the labor market amid inflation concerns, the strong figures in September have provided positive signals. Chris Rupkey, chief economist at FwdBonds LLC, described the report as a “monster jobs number.”
This job growth is especially noteworthy following a year when the labor market had been adjusting after the pandemic and responding to the Fed’s interest rate hikes. Despite initial worries about weaker job reports in July and August, the latest numbers, along with upward revisions for previous months, have eased those concerns.
Senior economist Elise Gould pointed out that the labor market is robust, with real wage growth and job numbers that surpass pre-pandemic levels.
“The labor market is strong. When we compare it to four years ago, during the pandemic, it’s clearly much stronger; but even when you compare it to 2019, before the pandemic began. Real wage growth is up, and a lot of jobs have been added.”
Elise Gould
Average Hourly Earnings Surge 4% as Fed Cuts Rates, Fueling Hiring Frenzy Amidst Soaring Inflation
In September, average hourly earnings rose by 0.4%, bringing the annual increase to 4%. As inflation moves closer to the Federal Reserve’s 2% target, the focus has shifted to maintaining healthy employment levels.
The Fed’s recent decision to cut interest rates by half a point reflects its commitment to supporting the labor market. This lower interest rate environment is expected to encourage businesses to resume hiring that had been put on hold.
According to Josh Hirt, a senior economist at Vanguard, the strong job growth reduces the need for aggressive rate cuts, suggesting a more careful approach moving forward.
As the Fed prepares for its next decision on November 6, the impact of ongoing events, such as labor strikes and natural disasters, on future employment reports remains to be seen.
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