WASHINGTON — The US labor market surged in September, blowing expectations out of the water by adding 336,000 jobs, according to Bureau of Labor Statistics data released Friday.
It’s the largest monthly employment gain since January and is significantly above August’s net gain of 227,000 jobs, which was revised up by 40,000 from initial estimates.
Job growth to end the summer was hotter than initially thought: In addition to August’s upward revisions, July’s gains were revised up by 79,000 to 236,000.
“The job market is tinder-box hot,” Sung Won Soh, a professor of finance and economics at Loyola Marymount University and chief economist of SS Economics wrote.
In September, leisure and hospitality helped drive job growth higher, with 96,000 jobs added. That’s above the pace of 61,000 jobs a month that this sector has seen during the past 12 months, according to the BLS report. Government jobs also saw a hefty boost, rising by 73,000.
The unemployment rate held steady at 3.8% in August, and the number of unemployed workers was essentially unchanged at 6.4 million.
Consensus estimates from economists were for 170,000 net jobs added and a jobless rate of 3.7%, according to Refinitiv.
While September marks the 33rd consecutive month of job growth for the United States, the Federal Reserve has been aiming to slow the economy and cool down the labor market.
Dow futures tumbled by more than 200 points on the news, with futures on the S&P and Nasdaq falling by around 1% and 2%, respectively, as traders anticipated an additional rate hike from the Federal Reserve.
Wages not as hot
Job growth may be generating plenty of heat, but wages are cooling off.
Average hourly earnings rose by 0.2% in September, bringing the annual gain to 4.2%, according to the Bureau of Labor Statistics’ jobs report released Friday.
That lands below economists’ expectations for a monthly uptick of 0.3% and annual increase of 4.3%, according to Refinitiv.
September’s wage growth is the lowest seen monthly since February 2022 and year-over-year since June 2021, noted Andrew Patterson, Vanguard senior economist.
“Like most reports, the Fed will find things to like and dislike here,” Patterson wrote Friday. “Inflation data will weigh heavily this month ahead of [the Fed’s next meeting on October 31 and November 1].”
The resiliency of the labor market has helped to keep consumer spending strong and the economy churning, but Fed officials have expressed concern that rising wages could be too much of a good thing and put upward pressure on inflation.
Inflation gauges closely tracked by the Fed have cooled significantly since hitting highs last year; however, they’ve been easing at a slower pace in recent months, thanks in part to a pickup in gas prices.
Still, cooling inflation has helped Americans finally see real wage growth in recent months.
