The US economy demonstrated remarkable resilience by adding significantly more jobs than anticipated in September, as evidenced by recent government data released on Friday. Total nonfarm payrolls surged by an impressive 254,000 in the previous month, a figure well above the consensus forecast of 150,000, which was drawn from a survey conducted by Bloomberg.
Furthermore, the job gains for August were revised upward by 17,000, bringing the total to 159,000, while July's gains were advanced by 55,000. In parallel, the unemployment rate saw a modest decline, settling at 4.1%, down from August's rate of 4.2%, which also aligns with market expectations for September.
"The September employment report was much stronger than expected, with job growth blowing past expectations, the unemployment rate declining and wage growth accelerating," remarked Nancy Vanden Houten, Lead Economist at Oxford Economics, in communications addressed to MT Newswires. The private payroll sector also experienced robust growth, increasing by 223,000 in September following an uptick of 114,000 in the previous month, thus exceeding Bloomberg's consensus estimate of 125,000.
The service industry accounted for a significant portion of this growth, adding 202,000 jobs in September, compared to a more modest rise of 109,000 reflected in the BLS data for August. Job additions in the goods-producing sector also ramped up, advancing to 21,000 from just 5,000. In terms of compensation, average hourly earnings showed a sequential increase of 0.4%, surpassing the anticipated 0.3% pace as projected by financial analysts.
On an annual basis, the wage growth exhibited a solid increase of 4%, exceeding expectations which were set at 3.8%. Last month, the Federal Reserve implemented a 50 basis-point cut to its benchmark lending rate, reducing it to a range between 4.75% and 5%. However, in light of the latest employment report, further reductions of the same magnitude now appear unlikely, according to Vanden Houten.
She added that the Federal Reserve is expected to enact 25 basis-point cuts in both November and December. Earlier in the week, Fed Chair Jerome Powell mentioned that the monetary policy isn't predetermined, and any future interest rate adjustments will hinge upon forthcoming economic data, evaluated on a meeting-by-meeting basis. Looking ahead, the employment growth trajectory may weaken in October, particularly if the worker strike at Boeing (BA), which commenced in September, continues into the following week.
Vanden Houten highlighted that the recent suspension of the dockworkers strike along the East and Gulf coast ports removed a significant source of potential weakness in the October jobs report, indicating a more positive outlook than earlier projections might have suggested..