In September, the U.S. job market experienced robust growth, with nonfarm payrolls surging by 336,000 jobs, marking the largest increase in eight months. This substantial gain in employment, along with upward revisions to job counts for July and August, indicates a strong labor market and accelerated economic activity in the third quarter. Despite these positive indicators, wage growth has slowed.
While the Federal Reserve had been raising interest rates to cool demand, the resilience of the labor market and the broader economy suggests that monetary policy may remain tight for some time. Job openings increased in August, and first-time applications for state unemployment benefits remained low in September, further supporting this view.
However, the recent surge in long-term U.S. Treasury yields has raised concerns, leading to uncertainty about whether the Fed will continue raising rates. Some experts believe that the tightening of financial conditions due to soaring bond yields, a stronger dollar, and increased equity market volatility might prompt the Fed to reconsider further rate hikes.
The leisure and hospitality industry led the increase in payrolls, adding 96,000 jobs, primarily in restaurants and bars. Government employment increased by 73,000 jobs, with the healthcare sector also contributing significantly. The report also noted job gains in professional services, transportation, warehousing, retail, and construction, despite high mortgage rates.
While wage growth has slowed recently, it still outpaces the Fed’s 2% inflation target. With labor market conditions improving, policymakers are closely monitoring these developments. The unemployment rate remained at 3.8%, while a broader measure of unemployment dropped to 7.0%. Overall, the labor market’s strength continues to support economic growth, with estimates for third-quarter growth as high as 4.9%, well above the Fed’s non-inflationary rate target.