The U.S. economy created 336,000 new jobs in September, reversing the cooling trend that was seen over the summer months, according to new data from the Bureau of Labor Statistics (BLS). This was also an increase from the upwardly revised 227,000 in August and higher than the consensus estimate of 170,000.
After seven months of downward employment revisions, the BLS adjusted payrolls for July and August higher by 79,000 and 40,000, respectively.
The unemployment rate was unchanged at 3.8 percent, topping the market forecast of 3.7 percent. The labor force participation rate was also flat at 62.8 percent.
Annualized average hourly earnings slipped to 4.2 percent, down from 4.3 percent. On a month-over-month basis, average hourly earnings edged up 0.2 percent, unchanged from the previous month.
Most of the job gains were led by three sectors: leisure and hospitality (96,000), government (73,000), and health care (41,000). Social assistance added 25,000 positions while manufacturing payrolls grew by 17,000.
Employment in various sectors, such as transportation and warehousing, information, mining, and construction, was little changed.
The number of people employed part-time for economic reasons was unchanged at 4.1 million. The number of individuals not in the labor force but wanting a job was flat at 5.5 million. The number of workers with two or more jobs inched slightly higher, to 8.151 million.
Full-time employment fell by 22,000, while part-time employment advanced by 151,000.
The Impact on Fed Policy
The U.S. financial markets tanked following the September jobs report in pre-market trading, with the leading benchmark indexes down as much as 1 percent.
The U.S. Dollar Index (DXY), a gauge of the greenback against a basket of currencies, popped as much as 0.4 percent to head toward the crucial 107.00 mark.
Treasury yields soared across the board. The benchmark 10-year yield surged 12 basis points, to nearly 4.84 percent. The two-year yield picked up more than 10 basis points, to 5.13 percent, and the 30-year yield advanced 11 basis points, to close to 5 percent.
U.S. bonds popped this week after better-than-expected labor data, suggesting it would give the Federal Reserve more room to tighten monetary policy and raise interest rates.
The two-, 10-, and 30-year Treasury yields hit their highest levels in 16 years earlier this week before experiencing a modest pullback. But the robust September jobs report allowed the yields to return to their best levels since 2007.
Many monetary policymakers contend that the central bank might need to pull the trigger on another rate hike or keep interest rates higher for longer to achieve the institution’s 2 percent target inflation goal.
“Inflation continues to be too high, and I expect it will likely be appropriate for the Committee to raise rates further and hold them at a restrictive level for some time to return inflation to our 2 percent goal in a timely way,” said Fed Gov. Michelle Bowman in a prepared speech at a business conference in Alberta, Canada, on Oct. 2.
According to the Federal Reserve’s latest Summary of Economic Projections (SEP), officials see the median policy rate at 5.6 percent, meaning that the Fed’s policy-making arm, the Federal Open Market Committee, would need to agree to one more rate increase at the November or December policy meetings. SEP data also trimmed the size of rate cuts late next year by 50 basis points, indicating that elevated rates would be here to stay.
In addition, the SEP numbers highlight that the unemployment rate will finish 2023 at 3.8 percent, down from the June projection of 4.1 percent. The jobless rate is also expected to be 4.1 percent in 2024 and 2025, a downward revision from the forecast of 4.5 percent.
A Week of Labor Data
Heading into the September jobs report, the U.S. labor market appeared to be doing better than what many economists had feared over the summer.
The number of job openings climbed by 690,000, to 9.61 million in August, up from an upwardly revised 8.92 million in July. This also topped the consensus estimate of 8.8 million.
Layoffs by U.S.-based employers were much lower than market forecasts. According to a report by Challenger, Gray & Christmas, Inc., firms announced plans to terminate 4,457 positions in September, down from 75,151 in the previous month. At the same time, employers announced intentions to add more than 590,000 positions, up from 380,00 in August.
Still, in the third quarter, employers announced 146,305 layoffs, up 92 percent year over year. Year to date, businesses have planned approximately 604,000 job cuts, the highest January–September total since 2020, driven by technology (151,989) and retail (70,714).
“Employers are grappling with inflation, rate increases, labor issues and consumer demand as we enter the fourth quarter,” said Andrew Challenger, labor expert and senior vice president of Challenger, Gray & Christmas.
But the ADP’s monthly National Employment Report threw a curveball in the better-than-expected labor numbers as the private sector reportedly created 89,000 new jobs, down from 180,000 in the previous month and below the market forecast of 153,000.
“We are seeing a steepening decline in jobs this month. In addition, we are seeing a steady decline in wages in the past 12 months,” said Nela Richardson, the chief economist at ADP.
From The Epoch Times