- The US economy added 254,000 jobs in September, way above the forecast of 147,000.
- The unemployment rate unexpectedly decreased to 4.1% in September.
- The Fed is pivoting away from fighting inflation to supporting the labor market.
The US economy saw way better job growth than expected in September. It added 254,000 jobs during the month, blowing away the forecast of 147,000.
Additionally, the unemployment rate unexpectedly fell to 4.1%, below the consensus estimate of 4.2%. It marks the second straight monthly decline.
The encouraging numbers were further evidence of labor-market strength. The Federal Reserve signaled a pivot from fighting inflation to supporting the job market with a 50-basis-point interest-rate cut in mid-September, the first cut in four years.
The rate of labor-force participation was unchanged once again, sitting at 62.7%.
Wage growth was another highlight for the labor market in September. Average earnings were $35.36 an hour in September, 4% higher than a year ago. That's a higher year-over-year increase than the 3.9% in August. Earnings also rose 0.4% month over month in September from $35.23 an hour in August.
"We like to see wages going up. The fear is obviously that wages would accelerate to a point that they would impact inflation, and that's something that the Federal Reserve will be keeping an eye on," Cory Stahle, an economist at the Indeed Hiring Lab, told Business Insider. "But right now, with seeing the data we've seen from average hourly earnings in the last few months, I don't think there's any immediate cause for concern."
The latest jobs report didn't indicate just a strong September. Job growth for July and August were both revised upward, with 72,000 more jobs added to the economy than the Bureau of Labor Statistics previously reported.
The strong report will steer the central bank's next rate decision in November and is likely to reduce the odds of a second straight jumbo rate cut. The market's estimated probability of a 25-basis-point cut jumped after the report to about 90%, according to the CME FedWatch Tool.
"Any way you slice it, September's employment report was much stronger than expectations," Jack McIntyre, a portfolio manager at Brandywine Global, said. "Going forward, the strong jobs number demands a repricing of Fed rate-cut expectations — by both the market and by the Fed."
With the presidential election just a month away, jobs and the economy have consistently been at the top of Americans' minds. In a poll this week of US adults by The Economist and YouGov, 73% of respondents said jobs and the economy were "very important" issues to them. Twelve percent said it was their most important issue, which tied with immigration and ranked behind only inflation and prices (23%) as the most common answer.