WASHINGTON (AP) – American employers added a surprisingly strong 254,000 jobs in September, easing concerns about a weakening labor market and showing that the pace of hiring was sufficient to support economic growth. This suggests that the market is in good shape.
Last month’s increase was much higher than economists had expected, and was a sharp increase from August’s 159,000 jobs increase. And after rising through most of 2024, the unemployment rate fell for the second straight month, from 4.2% in August to 4.1% in September, the Labor Department announced Friday.
The latest figures suggest that many businesses remain reasonably confident in hiring despite continued pressure from high interest rates. Few employers are laying off workers, but many are becoming more cautious about hiring.
In a positive sign, the Labor Department also revised upward its employment growth forecast for July and August by a combined 72,000 jobs. Combined with these revisions, September’s job gains (forecasters had predicted only about 140,000) represent a solid 186,000 average increase over the past three months. It means that. The three-month average for August was just 140,000.
“There’s still a lot more momentum in the jobs market than we expected,” said Stephen Stanley, chief economist at banking firm Santander. “I would call it solid, but certainly not as explosive as last year or the year before when we were catching up from the pandemic. But the overall pace of job growth is very healthy.”
Employment gains in September were fairly broad-based, and if this trend continues, it will be a positive trend. Restaurants and bars added 69,000 jobs. Health care companies added 45,000 jobs, government agencies added 31,000 jobs, social care employers added 27,000 jobs, and construction companies added 25,000 jobs. The sector, which includes professional and business services, added 17,000 jobs after a third straight month of job losses.
Average hourly wage increases were also steady. The index rose 0.4% from August, higher than expected, and was slightly lower than the 0.5% rise from the previous month. Compared to the same month last year, hourly wages increased by 4%, one step higher than the 3.9% increase in August compared to the same month last year.
In response to progress in curbing inflation in the economy, the US Federal Reserve (Fed) last month slashed its base interest rate by 0.5 points, marking the first rate cut in four years, with further rate cuts likely in the coming months. He said it was highly sexual. The Fed has said it wants to ease borrowing costs to support the job market. Given Friday’s strong jobs report, the Fed is now likely to cut its key policy rate by more typical quarter-point increments.
“September’s employment report shows that demand for labor increased significantly in the early fall,” said Bill Adams, chief economist at Comerica Bank. “The U.S. economy will grow steadily in 2024 even as inflation slows to near the Fed’s target.”
Economic resilience came to the rescue. Economists had expected the Fed’s aggressive campaign to curb inflation (it raised interest rates 11 times in 2022 and 2023) to cause a recession. It wasn’t. The economy continued to grow even as borrowing costs for consumers and businesses rose to an all-time high.
Most economists say the Fed appears to have achieved the once-unlikely prospect of a “soft landing” in which high interest rates tamp down inflation without causing a recession.
As the Nov. 5 presidential election approaches, the economy is weighing heavily on voters. Many Americans are unimpressed with the sustainability of the job market and remain dissatisfied with prices that remain an average of 19% higher than they were in February 2021. That’s when the economy recovered from the pandemic recession with unexpected speed and strength, and inflation began to soar. , causing severe material and labor shortages.
Public dissatisfaction with inflation and the economy under President Joe Biden has become a political burden for Vice President Kamala Harris in her race for the White House against former President Donald Trump.
The employment statistics for October, which the government will release four days before election day, are likely to be disrupted by the effects of Hurricane Helen and a strike by Boeing’s machinists.
However, for the economy as a whole, most indicators look solid. The US economy, the world’s largest, grew at an annual rate of 3% from April to June, driven by consumer spending and business investment. Annual growth for the just-ended July-September period has slowed but remains a healthy 2.5%, according to the Federal Reserve Bank of Atlanta’s forecasting tool.
Last month, people’s households increased their spending at retail stores. And even as employment slows, Americans enjoy unusual job security. The ratio of layoffs to employment is near an all-time low. The number of people applying for unemployment benefits also remains near historic lows.
While some companies are hesitant to increase salaries, companies generally seem reluctant to lay off employees. This unusual momentum may be due to the fact that many employers were caught flat-footed and found themselves short-staffed after the economy began to recover from the pandemic recession. The number of posted jobs also peaked at 12.2 million in March 2022, and has steadily declined to 8 million in August.
Workers are finding a colder environment for job seekers. Far fewer people are confident enough to quit their job for a better position. The number of Americans quitting their jobs has reached its lowest level since August 2020, when the economy was still reeling from the coronavirus.
Economists say the Fed is almost certain to cut interest rates by a modest 0.5 percentage point in November, following a larger-than-usual 0.5 percentage point cut in September. The healthier the job market appears, the less aggressive the Fed will be in easing borrowing costs. Policymakers will want to avoid easing credit so quickly that inflationary pressures reignite.
“It doesn’t look like the bottom of the labor market has fallen out,” said Jason Pride, head of investment strategy at Glenmede.
After Friday’s jobs report, Wall Street traders priced in a 93% chance of a rate cut at the November Fed meeting by a quarter of a percentage point rather than a quarter of a percentage point, up from 68% on Thursday. I’m here.
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Associated Press Economic Writer Christopher Lugabar contributed to this report.
