US Job Growth Soars in September as Unemployment Rate Decreases to 4.1% – Reuters

U.S. Job Growth Rises in September, Unemployment Rate Dips to 4.1%

U.S. job growth picked up in September, with the unemployment rate falling to 4.1%, which may lessen the Federal Reserve’s need for significant interest rate cuts in its upcoming meetings this year.

According to the Labor Department’s Bureau of Labor Statistics, nonfarm payrolls increased by 254,000 jobs last month, following a revised increase of 159,000 in August. Economists had anticipated a rise of 140,000 jobs for September, after an initially reported increase of 142,000 in August.

Typically, the initial payroll figures for August have been revised higher over the past decade. September’s job gain estimates ranged from 70,000 to 220,000.

The slowdown in the labor market appears driven by modest hiring, accompanied by an increase in labor supply, largely due to rising immigration. Despite this, layoffs remain low, supporting the economy through robust consumer spending.

Average hourly earnings rose by 0.4% after a 0.5% increase in August, with wages climbing 4.0% year-on-year compared to 3.9% the previous month.

The unemployment rate decreased from 4.2% in August, having risen from 3.4% in April 2023. This rise is partly attributed to changes in the 16-24 age cohort and an uptick in temporary layoffs during the annual automobile plant shutdowns in July.

The Federal Reserve began its policy easing cycle with a notable half-percentage-point cut last month. Fed Chair Jerome Powell expressed growing concerns about the labor market’s health.

Despite the labor market cooling off, recent annual benchmark revisions to national accounts data revealed a stronger-than-expected economy, with significant upgrades to growth, income, savings, and corporate profits.

Acknowledging this improved economic landscape, Powell pushed back against expectations for another half-percentage-point rate cut in November, stating that the committee is not in a rush to implement quick rate cuts.

In recent years, the Fed has raised rates by 525 basis points and initiated its first rate cut since 2020 last month. The current policy rate is set in the 4.75%-5.00% range.

As of early Friday, financial markets projected a roughly 71.5% chance of a quarter-point rate reduction in November, while the likelihood of a 50 basis point cut stood at around 28.5%.

However, the labor market may face some short-term disruptions following Hurricane Helene, which significantly impacted parts of the U.S. Southeast last week. Additionally, tens of thousands of machinists at Boeing initiated a strike in September, potentially affecting the company’s suppliers.

A recent work stoppage involving about 45,000 dockworkers on the East Coast and Gulf Coast concluded late Thursday after union leaders and port operators reached a tentative agreement. Should the Boeing strike continue beyond next week, it could impact nonfarm payrolls data for October, which will be released shortly before the U.S. presidential election on November 5.