The US economy added 336,000 jobs last month, nearly double what was expected

The US economy added 336,000 jobs last month, nearly double what was expected


Minneapolis
CNN

Fall is here, the pumpkin lattes are flowing, and in some states, there’s a bite in the air of the season’s first cold snap. But not for the US labor market: September was extremely hot.

The U.S. economy added an estimated 336,000 jobs last month, beating expectations, according to Bureau of Labor Statistics data released Friday.

It’s the largest monthly increase in employment since January and is well above August’s net gain of 227,000 jobs, a total that was revised up by 40,000 from initial estimates.

Job growth at the height of the summer was hotter than initially thought: In addition to August’s upward revisions, July’s gains were revised by 79,000 to 236,000.

“The labor market is very hot,” said Sung-Won Suh, professor of finance and economics at Loyola Marymount University and chief economist at SS Economics.

In September, the leisure and hospitality sector helped push job growth higher, with 96,000 jobs added. That’s higher than the pace of 61,000 jobs per month the sector has seen over the past 12 months, according to the BLS report. Government jobs also saw a significant increase, rising by 73,000 jobs.

Job growth occurred in all major sectors.

President Joe Biden praised the stronger-than-expected report on Friday.

Biden said during a press conference: “It is not a coincidence. It is Biden’s economy. We are working to develop the economy from the middle outward, from the bottom to the top, not from the top to the bottom.” “Inflation falls at the same time.”

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The unemployment rate stabilized at 3.8% in August, and the number of unemployed workers was unchanged at 6.4 million.

Consensus estimates from economists were for a net job addition of 170,000 and an unemployment rate of 3.7%, according to Refinitiv.

While September marks the 33rd straight month of job growth in the United States, the Federal Reserve aims to slow the economy and cool the labor market.

Dow futures fell more than 200 points on the news, with S&P and Nasdaq futures down about 1% and 2%, respectively, as traders anticipated an additional rate hike from the Federal Reserve.

Job growth may be generating a lot of heat, but wages are starting to cool off.

Average hourly earnings rose 0.2% in September, bringing the annual gain to 4.2%, according to a jobs report released by the Bureau of Labor Statistics on Friday.

That’s lower than economists’ expectations of a 0.3% monthly rise and a 4.3% annual increase, according to Refinitiv.

Wage growth in September was the lowest monthly level since February 2022 and on an annual basis since June 2021, noted Andrew Patterson, chief economist at Vanguard.

“Like most reports, the Fed will find things to like and dislike here,” Patterson wrote on Friday. “Inflation data will have a big impact this month before (the Fed’s next meeting on October 31 and November 1).”

Labor market flexibility has helped keep consumer spending strong and the economy turbulent, but Fed officials have expressed concern that higher wages may be too much of a good thing and put upward pressure on inflation.

Measures of inflation that the Fed closely tracks have slowed significantly since hitting their peaks last year. However, they have declined at a slower pace in recent months, thanks in part to higher gas prices.

At this point, despite stronger-than-expected job growth, there are no signs that wage growth will accelerate, said Jim McCoy, senior vice president at staffing firm ManpowerGroup.

“If you look at the sectors where there are the biggest gains — entertainment, government, health care — typically they are not the sectors that have generated a lot of wage inflation,” he said. “What we’ve seen is that the wage gains for entry-level workers have really stuck around. We’ve seen significant gains for workers in the $15 to $20 an hour range over the last couple of years; we don’t see that upward pressure now.”

Slowing inflation has finally helped Americans see real wage growth in recent months.

Other key workforce metrics remained flat during September: average weekly hours worked were unchanged at 34.4 hours, indicating that employers were not cutting hours, and the labor force participation rate was unbudged from 62.8%.

However, the report showed that there was a slight decline in the labor force participation rate for women of prime working age, which ranges between 25 and 54 years. After hitting an all-time high in June of 77.8%, that rate is now 77.4%, down 0.2 percentage points from August.

“In the coming months, we’re watching this number closely because the end of federal child care funding may sideline working mothers,” Daniel Chao, chief economist at Glassdoor, wrote in a commentary on Friday.

The federal Pandemic-Era Child Care Stabilization Grant program expired on September 30.

The historic federal investment, which was part of the $1.9 trillion American Rescue Plan Act passed by Democrats in March 2021, supported more than 220,000 child care programs, impacting up to 9.6 million children, according to the federal Administration for Children and Families.

Nationwide, more than 70,000 child care programs are expected to close, and about 3.2 million children could lose their places due to the expiration of the Child Care Stabilization Grant program, according to an analysis by the Century Foundation.

Federal data is fluid and often subject to change as more detailed and accurate information becomes more readily available. Today’s headline jobs number — a net surprise of 336,000 jobs — is a preliminary estimate that will be revised two more times.

Heading into Friday, economists told CNN they will be closely watching how the latest revisions play out, because every monthly job increase during the first half of the year was eventually revised downward (a cumulative difference of 325,000 jobs), Census Bureau data show. the job. .

“Many interpret this series of downward revisions as a signal that we may be at an inflection point and that the labor market could weaken more quickly than official data suggests,” Julia Pollack, chief economist at ZipRecruiter, previously told CNN. week.

However, the surprising September jobs report did not continue in that vein. July’s monthly gains (initially revised by 30,000 jobs) saw an upward climb of 79,000 jobs this time to reach 236,000 jobs. A second look at August suggests job growth is now at 227,000 for the month, an increase of 40,000.

She added that these latest revisions as well as September’s rise are in line with other recent economic data points, especially strong consumer spending.

“Data is harder to come by, because the economy is moving much more quickly,” Diane Swonk, chief economist at KPMG, said in an interview with CNN on Friday. “I talk to (executives) all the time, and one of the toughest issues they say about the post-pandemic economy is how quickly things will turn around.”

She said that this is the economy we live in, and it requires more flexibility.

“But at the end of the day, it’s still more flexible,” she said. “It’s remarkably flexible. That’s a wonderful thing.”

CNN’s Tammy Lohby contributed to this report.

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