US hiring tops all estimates, while jobless rate falls to 4.1%
This will reduce the need for the Federal Reserve to maintain large interest rate cuts
US JOB growth in September topped all estimates with the largest advance since March and the unemployment rate unexpectedly declined, quelling concerns of a marked deterioration in the labour market.
Nonfarm payrolls increased 254,000 in September following an upwardly revised 72,000 advance over the prior two months, according to Bureau of Labor Statistics’ figures released on Friday (Oct 4). The unemployment rate fell to 4.1 per cent.
Combined with data earlier this week showing that demand for workers is still healthy while layoffs remain low, the payrolls report is likely to alleviate concerns that the labour market is cooling too quickly. The jobs figures may boost odds that Federal Reserve policymakers will reduce interest rates a quarter of a percentage point next month after a larger cut at their September meeting.
Chair Jerome Powell this week reaffirmed that shielding the labour market was part of the reason why the Fed decided to kick off its easing cycle with a larger rate cut in September. Powell and his colleagues believe no further cooling is needed to bring inflation down to the Fed’s 2 per cent target, he said.
The gain in hiring last month was driven by leisure and hospitality, as well as health care and government.
Stock futures, the dollar and Treasury yields rose after the figures. Pricing in the swaps market showed traders paring bets on a Fed interest-rate cut larger than a quarter-point in November.
The October jobs report will include the impact of a walkout last month by some 33,000 Boeing factory workers. Another large strike, by US dockworkers, ended after three days and likely won’t have a direct effect on the month’s payrolls count.
However, another wrinkle is Hurricane Helene, which cut a path of death and destruction across a swath of the US Southeast. Parts of the region are struggling to reopen roads and reconnect power, indicating business will take time to recover. BLOOMBERG
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