The U.S. economy added 254,000 nonfarm payroll jobs in September, marking the largest increase in six months, while the unemployment rate dropped to 4.1%, according to the Labor Department’s report released on Friday. These numbers far exceeded economists’ forecasts of 140,000 new jobs, signaling continued labor market strength despite broader economic concerns.
Wages also saw solid growth, with average hourly earnings rising 0.4% from the previous month and up 4.0% year-over-year. This robust data comes as the Federal Reserve evaluates its next steps, with analysts suggesting that the central bank may hold off on aggressive rate cuts.
Job Gains Across Multiple Sectors
September’s job growth was led by hiring in restaurants and bars, which added 69,000 jobs, followed by the healthcare sector with 45,000 new positions. Government employment grew by 31,000 jobs, and the construction industry added 25,000, driven by nonresidential specialty trade contractors. Retailers also contributed with 15,600 new jobs, primarily in supermarkets and drugstores.
However, the report also highlighted some losses, with the manufacturing sector shedding 7,000 jobs, primarily in the motor vehicle industry, and transportation and warehousing losing 8,600 jobs, mostly in storage facilities.
Fed’s Approach to Interest Rates
The unexpectedly strong labor market performance has led some economists to question whether the Federal Reserve’s recent 50 basis-point rate cut was necessary. Despite this, the September employment report suggests that the Fed may not feel pressured to deliver another large rate reduction in its upcoming meeting in November. The Fed has raised interest rates by 525 basis points since 2022 in a bid to curb inflation, but wage growth, while strong, has not reignited inflationary concerns.
Jonathan Millar, a senior economist at Barclays, noted, “Today’s report reinforces the broad resilience theme for the U.S. economy, pushing aside concerns of an imminent deterioration in labor market conditions.”
Hurricane Helene and Boeing Strike
While the labor market showed resilience in September, potential disruptions loom on the horizon. Hurricane Helene devastated parts of the U.S. Southeast last week, and the ongoing strike by Boeing machinists could impact October’s job report. These factors may create turbulence in the labor market, but analysts remain cautiously optimistic.
The employment-to-population ratio, a key indicator of the economy’s ability to generate jobs, increased to 60.2%, up from 60.0% in August, and fewer people were working part-time for economic reasons. The labor market appears to be stabilizing after several months of fluctuation.
With strong job growth, a falling unemployment rate, and solid wage gains, September’s employment report highlights the resilience of the U.S. economy. As the Federal Reserve evaluates its next moves, the labor market appears to be steadying, with challenges like the Boeing strike and hurricane recovery still on the horizon.
