U.S. Employment Surges in September, Pointing to Strong Labor Market
The U.S. labor market demonstrated its resilience in September, with employment increasing by the most in eight months. The surge in hiring across various sectors indicates a strong labor market, potentially giving the Federal Reserve the confidence to raise interest rates again. The report from the Labor Department also revealed upward revisions to July and August’s job counts, further solidifying expectations of accelerated economic activity in the third quarter.
The robust employment figures follow recent positive news, including a jump in job openings in August and consistently low first-time applications for state unemployment benefits in September. These indicators suggest that the U.S. economy remains on a steady growth path.
Nonfarm payrolls saw a significant increase of 336,000 jobs last month, surpassing economists’ expectations. The leisure and hospitality industry led the way with 96,000 new jobs, particularly in restaurants and bars, which have now returned to pre-pandemic employment levels. Government employment also rose by 73,000 jobs, primarily driven by state government education and local government positions.
Other sectors contributing to the overall employment growth included healthcare, professional and technical services, transportation and warehousing, retail, and construction. Despite mortgage rates reaching more than 20-year highs, the construction industry continued to see positive gains, mainly driven by homebuilding.
While the labor market remains strong, wage growth showed signs of slowing. Average hourly earnings rose by 0.2% in September, resulting in a smaller annual increase of 4.2%, the smallest gain since June 2021. However, wages are still rising faster than the Fed’s 2% inflation target.
The Federal Reserve, which has been gradually raising interest rates since March 2022, may find comfort in the moderation of wage growth. The upcoming inflation data will provide further clarity on the central bank’s next moves.
Overall, the robust employment figures and sustained labor market strength bode well for the U.S. economy. Growth estimates for the third quarter are as high as a 4.9% annualized pace, more than double the non-inflationary rate considered by Fed officials.
As the labor market continues to support the economy, consumer spending is expected to remain steady. While individual wage growth may be slower, the solid rate of hiring contributes to overall aggregate income derived from the labor market.
In conclusion, the September employment report showcases the resilience of the U.S. labor market and reinforces the positive trajectory of the economy. With strong hiring across various sectors, the Federal Reserve may have the confidence to further tighten monetary policy, although wage growth is showing signs of moderation.