Employment growth crushes expectations with 336,000 jobs added in September
Zachary Halaschak
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The economy added 336,000 jobs in September, the Bureau of Labor Statistics reported Friday, a number far above expectations and a sign that the labor market has momentum despite the Federal Reserve’s interest rate hikes.
The jobs will bolster the messaging coming out of the White House, which has been working to credit President Joe Biden for the strong job creation over the past year.
The unemployment rate remained at 3.8% in September, extremely low by historical standards.
September marked that strongest job growth since January. Friday’s report also revised up the employment gains in July and August by a combined July’s employment gains were revised up by combined 119,000. The new numbers show that, after slowing over the course of 2023, job creation is now accelerating, even though it would be expected to slow down at this stage of the recovery from the pandemic disruptions.
“The revision numbers upward [are] quite unusual given historically we’ve seen revisions down, which is suggesting again that we have a stronger labor market than we previously anticipated or reported,” Brian Marks, executive director of the University of New Haven’s Entrepreneurship and Innovation Program, told the Washington Examiner after the report was released.
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After ticking up by 0.2 percentage points in August, the labor force participation rate was flat at 62.8% in September, around the level it has been since March.
In September, job gains occurred in leisure and hospitality; government; health care; professional, scientific, and technical services; and social assistance.
The Fed has carried out a historic effort to tighten monetary policy in response to the inflation that has wracked households over the past few years. Annual inflation, as measured by the consumer price index, fell from more than 9% last June to just over 3.7% as of last month.
Still, the central bank is targeting 2% long-run inflation, so there is a chance that the Fed will have to jack up rates further. In the gauge favored by the Fed, the consumption expenditures index, prices rose at a 3.5% annual rate in August, according to a report released last week.
The latest report, given the indications that the labor market is still humming right along, could increase the odds that the Fed will hold rates high for longer and could be a sign that the central bank could raise its interest rate target yet again.
The Fed’s target range is now 5.25% to 5.50%, still the highest level in more than two decades. Higher interest rates are meant to have the effect of slowing borrowing and investment, dampening overall commerce. Many economists fear that the rate-hike cycle will end in a recession.
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Gross domestic product growth has remained surprisingly buoyant despite the rate hikes.
The Bureau of Economic Analysis reported last week that the economy grew at a 2.1% annual rate in the second quarter of this year, near the 2.2% pace the quarter before — surprisingly strong growth given how high interest rates have risen.