Employers added 254,000 jobs in September, blowing away expectations and reversing the slowdown in hiring that prompted the Federal Reserve to cut major interest rates at its meeting last month.
Economists had expected 140,000 new jobs, according to financial data provider FactSet.
The unemployment rate edged down to 4.1% from 4.2% last month.
The jobs report will be the penultimate indicator on the labor market ahead of the Nov. 7 interest rate meeting, where the Federal Reserve is expected to cut benchmark interest rates again. Last month, the Federal Reserve jumbo cutThe interest rate was cut for the first time in four years against the backdrop of sluggish employment and a cooling economy.
But September’s surprisingly strong employment numbers suggest that the Fed’s previous interest rate hikes have helped cool the economy while avoiding a recession, and that the U.S. may be headed for a so-called “soft landing.” Experts point out that this suggests that
“Today’s numbers were a big hit with strong positive revisions to the jobs report and a decline in the unemployment rate,” Lindsey Rozner, head of multisector investing at Goldman Sachs Asset Management, said in an email. ” said in an email. “The economy is firmly headed for the postseason.”
Stocks rose on the back of the explosive jobs report, with the Dow Jones Industrial Average and S&P 500 both up 0.4% in early Friday trading. The Nasdaq Composite Index, which has a high proportion of tech stocks, rose 0.5%.
What does the jobs report mean for Fed rate cuts?
Experts say the positive data could give the Fed more flexibility in its November rate-cutting meeting, giving it room to cut rates by an even smaller 0.25 percentage point than last month’s 0.5 percentage point cut. Pointed out.
Gus Faucher, chief economist at PNC, said the positive report suggests the Fed is unlikely to repeat September’s jumbo interest rate cut during its two-day meeting in November. He added that the fund futures market is currently pricing in a 91% chance of a rate cut. The probability of a 25 basis point (bp) cut on November 7th was 47% a week ago.
“The Fed could continue to readjust its policy stance toward a more accommodative direction, but this shows the Fed is in no hurry right now,” said Ellis Osenbaugh, head of investment strategy at JPMorgan Wealth Management. It shows,” he said. Email. “Our base case calls for a 25 basis point rate cut in November and December and a continued moderate pace through 2025.”
However, he added that Hurricane Helen could disrupt recruitment efforts in October. The October jobs report, scheduled for release on Nov. 1, will be the last monthly jobs report the Fed will receive before its Nov. 7 interest rate decision. This is also the last employment report before the presidential election.
Employers added 159,000 jobs in August and 144,000 in July, according to the Labor Department’s revised numbers for the past two months.
wages increase faster than inflation
Average hourly wages rose 4% on an annual basis last month, showing that workers are staying ahead of inflation. Annual rate of 2.5% In August.
Inflation likely fell to 2.3% last month, according to a FactSet survey of economists. The consumer price index for September will be released on October 10th.
“Real purchasing power continues to increase,” said Jeffrey Roach, chief economist at LPL Financial. That’s “good news for businesses and consumers.”
Still, experts say many consumers continue to struggle to make ends meet after years of weak wage growth and high inflation. Economists generally say the economy is in good shape, but consumers, six in 10 voters, don’t see it the same way. explain the economy According to a CBS News poll, it was rated “poor.”
“Are some people still struggling? Of course they are,” EPI senior economist Elise Gould said in a blog post. “Even with low unemployment, there are still sideline workers and wages that remain too low for many families to make ends meet.”
Restaurants and other food service businesses added 69,000 jobs last month, and health care companies added 45,000 jobs, according to the Bureau of Labor Statistics.