The jobs market had a very strong September
- The US economy added 254,000 jobs in September, way above the forecast of 147,000.
- The unemployment rate unexpectedly decreased to 4.1% in September.
The US economy saw way better job growth than expected in September. It added 254,000 jobs during the month, blowing away the forecast of 147,000.
Additionally, the unemployment rate unexpectedly fell to 4.1%, below the consensus estimate of 4.2%. It marks the second straight monthly decline.
The encouraging numbers doubled down on a labor market that's showing signs of strength after a slowdown. The Federal Reserve signaled a pivot from fighting inflation to supporting the job market with a 50-basis-point interest rate cut in mid-September, the first cut in four years.
The labor force participation rate was unchanged once again, sitting at 62.7%.
Wage growth was another highlight for the labor market in September. Average earnings were $35.36 an hour in September, 4.0% higher than a year ago. That's a higher year-over-year increase than the 3.9% in August. Earnings also rose 0.4% month over month in September from $35.23 an hour in August.
The latest jobs report didn't just indicate a strong September. Job growth for July and August were both revised upward, adding 72,000 more jobs to the economy than the BLS previously said.
The strong report will steer the central bank's next rate decision in November, and is likely to reduce odds of a second straight jumbo-sized rate cut. The market's estimated probability of a 25-basis-point cut shot up after the report to around 90%, according to the CME FedWatch tool.
The report "gives the Federal Reserve flexibility to either cut interest rates by 25 basis points at their next meeting on November 7, or take a pause and revisit a potential rate cut in December," said Glen Smith, chief investment officer of GDS Wealth Management. "It was still the right decision for the Fed to cut rates by a deeper 50 basis points in September, which was essentially an insurance policy for the Fed to guard against any risk of a deterioration of the labor market."
With the presidential election now looming just a month away, jobs and the economy have consistently been at the top of Americans' minds. In a poll this week by The Economist and YouGov, 73% of respondents said jobs and the economy were "very important" issues to them. Twelve percent said it was their most important issue, which tied with immigration and ranked behind only inflation and prices (23%) as the most commonly cited answer.
This is a developing story. Please check back for updates.