The U.S. labor market added far more jobs than expected in September, but the unemployment rate unexpectedly fell, reflecting stronger job market conditions than Wall Street expected.
Labor market payrolls rose by 254,000 people in September, more than the 150,000 that economists expected, according to Bureau of Labor Statistics data released Friday.
Meanwhile, the unemployment rate fell to 4.1% from 4.2% in August. The number of new hires in September exceeded August’s revised figure of 159,000. Revised reports for both July and August show the U.S. economy added 72,000 more jobs in the past two months than previously reported.
Wage growth, an important indicator for measuring inflationary pressures, rose to 4% year-on-year from a 3.9% annual increase in August. On a monthly basis, wages rose by 0.4%, consistent with August’s data.
A key question raised in Friday’s report was whether the data reflected a significant cooling in the labor market, which could prompt the Fed to cut rates even further. Robert Sockin, senior global economist at Citi, told Yahoo Finance that the Fed is moving forward with the same “urgency” it had at its September meeting, when it cut interest rates by 0.5 percentage point after the better-than-expected jobs report. He said he was less likely to take action. .
“This puts the Fed in a pretty tight corner,” he said, adding that it’s unclear whether the Fed will cut rates by another 50 basis points this year.
Read more: Employment, inflation, and the Fed: How they all relate
Following the report, markets are pricing in a roughly 5% chance that the Fed will cut interest rates by 0.5 percentage point in November, down from 53% chance a week ago, according to the CME FedWatch tool.
“Given the strength of the labor market evident in the September jobs report, the real debate at the Fed is not to ease monetary policy in the first place,” Paul Ashworth, chief North American economist at Capital Economics, said in a note to clients on Friday. It should be a question of whether or not to do so.” “Hopes for a (50 basis point) rate cut are long gone.”
Futures prices linked to major U.S. stock indexes rose on the news. S&P 500 futures (ES=F) rose nearly 0.8%, and Dow Jones Industrial Average futures (YM=F) rose about 0.5%. Contracts on the tech-heavy Nasdaq 100 (NQ=F) rose 1.1%.
Neil Dutta, head of economics at Renaissance Macro, said in a note after the release that September’s jobs report was “undeniably good news” for the stock market.
“Ultimately, the Fed is still lowering interest rates even as the economy is growing,” Datta wrote.
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Friday’s report also showed the labor force participation rate remained unchanged from the previous month at 62.7%. Food and beverage services and restaurants led the increase in employment, with an increase of 69,000 jobs in the same month. Meanwhile, employment in the health care sector increased by 45,000, and employment in the government sector increased by 31,000.
Data released by ADP earlier this week showed the private sector added 143,000 jobs in September, more than the 125,000 expected by economists and significantly higher than the 99,000 in August. exceeded. This marks the end of five months of decline in private sector employment growth.
“This is a pretty healthy and broad-based recovery,” said Nella Richardson, chief economist at ADP. “And it was perhaps unexpected for many people who thought the job market was trending down. Of course, this month puts a pause on such assessments. Employment remains strong.”
Construction workers work on the roof of a house under construction in Alhambra, California, on September 23, 2024. (Frederick J. Brown/AFP, via Getty Images) (Frederick J. Brown, via Getty Images)
Josh Schafer is a reporter for Yahoo Finance. Follow him on X @_joshschafer.
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