The U.S. economy created a much larger-than-expected number of new jobs in September, spotlighting the persistent strength in the national labor market.
According to the Bureau of Labor Statistics, 254,000 new jobs were added last month, topping the consensus estimate of 140,000 positions. This was up from 159,000, which was adjusted higher from 142,000.
The unemployment rate dipped for the second straight month, sliding to 4.1 percent from 4.2 percent.
Food services and drinking places led the employment gains, creating 69,000 new jobs. This was followed by health care (45,000), government (31,000), social assistance (27,000), and construction (25,000). Manufacturing payrolls shed 7,000.
Average hourly earnings rose at a higher-than-expected month-over-month pace of 0.4 percent, down from 0.5 percent in August. Year-over-year average hourly earnings also advanced by 4 percent, up from 3.8 percent in the previous month.
The labor force participation rate held steady at 62.7 percent while average weekly hours dropped to 34.2.
Full-time employment increased by more than 400,000, and part-time jobs declined by 95,000. The number of individuals working two or more jobs hit an all-time high of 8.659 million.
The gap between U.S.- and foreign-born workers widened.
Foreign employment levels soared by 1.2 million to 31.414 million in September from a year ago. The number of employed U.S.-born workers fell by 825,000 to 130.632 million.
Market Reaction
U.S. stocks rallied in pre-market trading following the September jobs report, with the leading benchmark indexes up as much as 1.3 percent before the opening bell.
Treasury yields were green across the board. The benchmark 10-year yield rose by 11.5 basis points to 3.965 percent. The two-year yield surged 16 basis points to top 3.74 percent, while the 30-year bond added more than 9 basis points to above 4.27 percent.
The U.S. dollar index, a greenback measurement against a basket of currencies, rocketed above 102.50 after the labor data.
September employment figures indicate that the U.S. economy is still not close to slipping into a downturn, says Bryce Doty, the senior vice president and senior portfolio manager at Sit Investment Associates.
“Impressive jobs report. Still no signs of the economy sinking into a recession,” Doty said in a note. “The key for us will be if this strong jobs report translates into higher inflation. We don’t see signs of that.”
Chris Zaccarelli, the CIO of Independent Advisor Alliance, says these numbers should eliminate the notion that the economy is “about to fall off a cliff or that imminent doom is on the horizon.”
“While we don’t want to get too overly optimistic from this single report, we also try not to get too overly pessimistic when one or two reports come in softer-than-expected and what we have now is an economy that is expanding, a job market which is solid (if not strong) and a Federal Reserve that has not only stopped raising rates, but is actually cutting them,” Zaccarelli said.
The September jobs data might lower the expectations for the Federal Reserve slashing interest rates by another 50 basis points at the November policy meeting, says Gina Bolvin, the president of Bolvin Wealth Management Group.
“With oil prices rising because of Middle East tensions ratcheting up, and average hourly earnings rising, the Fed may worry about inflation rearing its ugly head,” Bolvin stated. “We may be back to them focusing on a 50/50 dual mandate.”
Flurry of Labor Data
A flurry of employment data heading into the September jobs report release offered mixed signals about the labor market’s health.
It kicked off with the federal agency’s Job Openings and Labor Turnover Summary (JOLTS). The monthly report showed that the number of job openings in August unexpectedly rose to 8.04 million, the highest level since May.
Job quits—a metric examining the number of people who voluntarily quit their positions and an indicator of how confident workers are about the labor market—declined to 3.084 million, the lowest reading since August 2020.
Hirings and layoffs flatlined in August.
Payroll processor ADP reported that private employers added a larger-than-expected 143,000 jobs in September. The growth was fueled by leisure and hospitality (34,000), construction (26,000), and education and health services (24,000). Manufacturing also added jobs for the first time since April.
“Stronger hiring didn’t require stronger pay growth last month. Typically, workers who change jobs see faster pay growth. But that premium over job-stayers shrank to 1.9 percent, matching a low we last saw in January,” said Nela Richardson, the chief economist at ADP, in the firm’s National Employment Report.
Wage growth for job-changers eased to 6.6 percent from 7.3 percent, while pay gains for job-stayers slowed to 4.7 percent from 4.8 percent.
According to global recruitment firm Challenger, Gray, and Christmas, layoffs tumbled 4 percent monthly in September, with U.S.-based employers announcing 72,821 terminations. This was up 53 percent from a year ago.
Year-to-date hiring plans were the lowest since 2011, further highlighting that companies are staying still in the current economic climate.
Weekly unemployment benefit claims rose by 6,000 for the week ending Sept. 28 to a three-week high of 225,000. While they are down from their July 2024 peak of 250,000, initial jobless claims are above the averages registered earlier this year.
From The Epoch Times