Surprising Job Growth in September Raises Questions for the Federal Reserve
The payrolls report delivered a positive surprise, as employers added 336,000 jobs in September, marking the highest figure since January and nearly double the median estimate. Furthermore, revisions to prior months’ data added an extra 119,000 jobs for July and August.
The unemployment rate remained at 3.8% due to a surge of previously unemployed individuals re-entering the job market. The participation rate also held steady at 62.8%, and average weekly hours remained unchanged. Wages increased by 0.2% from the previous month, but the annual wage growth slowed to 4.2%.
The surge in job gains was primarily attributed to the hospitality-leisure and education-healthcare sectors, aligning with a trend observed over the past year as these industries rebounded from the pandemic’s impact, driven by increasing demand for services. Restaurant and bar employment has now returned to pre-pandemic levels.
Regarding the Federal Reserve’s perspective, while the headline job numbers and wage growth are strong, some concerns arise from the household survey. Average hours worked have remained flat and are below last year’s levels, and the participation rate hasn’t changed significantly. This suggests that employers may not be drawing more workers from the sidelines. Consequently, there’s uncertainty about how the Fed will interpret this report in terms of future interest rate hikes.