In an unexpected surge, the US economy added 336,000 jobs in September, nearly doubling the projections made by economists surveyed by Bloomberg. This remarkable uptick in employment represents one of the highest monthly job totals since January. The unemployment rate, however, remained unchanged at the historic low of 3.8%. Meanwhile, the labor force participation rate experienced an uptick to 62.8%, marking its highest level since February 2020.
Revisions to the job reports for August and July revealed an additional 119,000 jobs were created during those months than initially reported, as per data from the Bureau of Labor Statistics.
September’s robust job gains were primarily propelled by the leisure and hospitality sector, which saw an impressive addition of 96,000 jobs. Government employment also saw a notable surge with 73,000 new positions. The food services and drinking places industry experienced an upswing of 61,000 jobs, reaching pre-pandemic levels. Additionally, the health care sector registered 41,000 new additions.
However, wage growth in September fell slightly below expectations, with a 0.2% monthly increase and a 4.2% gain from the preceding year. Average weekly hours remained steady at 34.4.
The report has raised fresh concerns regarding the potential delay in the Labor Market’s cooling, contrary to the Federal Reserve’s preferences in their efforts to combat inflation. Federal Reserve Chair Jerome Powell, on September 20th, emphasized the necessity for a moderation in the tightness of the labor market to achieve the central bank’s 2% inflation goal.
Market sentiment is now leaning towards a rate hike in November following the release of the job report. Morgan Stanley’s chief US economist, Ellen Zentner, stated, “Today’s report was unequivocally strong. Too strong for policymakers to relax their tightening bias. Inflation has been decelerating faster than Fed forecasts, but continued strength in job gains will fuel doubts that the pace of deceleration in inflation will be sustained.”
In response to the news, stock markets experienced a dip, with all three major averages seeing a sharp decline and yields on the 10-year and 30-year Treasury bonds surging.
The September jobs report, surpassing all projections, paints a picture of an unexpectedly robust labor market, fueling both optimism and fresh economic deliberations. As the US economy grapples with the ongoing coronavirus pandemic, the Federal Reserve faces a crucial decision-making juncture.
Source: Yahoo Finance
