Employment in the United States increased by the most in eight months in September, with hiring increasing across many sectors, showing the labor market's sustained resilience. Non-farm payrolls increased by 336,000 in the preceding month, representing the biggest rise since January. Furthermore, the July and August numbers were revised upward by 119,000 jobs, indicating stronger job growth than previously reported. The actual payroll growth roughly quadrupled the 170,000 expected by economists in a Reuters poll.
The unemployment rate remains stable at an 18-month high of 3.8%. While this shows the level of market stability, it also raises concerns about the overall condition of the economy. However, consistent job growth has provided some confidence, with third-quarter growth forecasts as high as 4.9% annualized, more than double what policymakers at the Federal Reserve consider as the non-inflationary rate of approximately 1.8%.
As the majority of the new jobs added last month were in lower-paying industries, wage growth, on the other hand, has shown signs of moderation. Nonetheless, wage growth is outpacing the 3.5% rate that economists believe is consistent with the Fed's 2% inflation target.
The labor market continues to be a major driver of economic growth, despite a little slowdown in wage inflation. The significant rise in job creation in September implies that firms are optimistic about the future and are aggressively hiring more people. This is good news for the economy because it accentuates that businesses are willing to spend more capital on human capital investments as they are confident in future demand.
The US job market has shown resilience and strength in September, with job growth surpassing expectations. While wage growth has shown signs of cooling, the overall labor market remains robust, supporting estimates for a strong third-quarter economic growth rate. The news of continuous job creation gives businesses and the Federal Reserve reassurance, demonstrating that an increase in interest rates can be withstood by the economy without having a negative impact.
Source: Mutikani, Lucia. "US job growth sizzles in September; wage inflation cooling". https://www.reuters.com/markets/us/us-job-growth-beats-expectations-september-unemployment-rate-unchanged-38-2023-10-06/. 06/10/23. [Date accessed: 16/10/23]
Edited by: Ansh Pincha
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