In a highly anticipated data release, the US labour market demonstrated unexpected resilience, adding a robust 119,000 jobs in the month of September. This key report from the Bureau of Labor Statistics (BLS), which was long-delayed due to a 44-day government shutdown, comfortably surpassed the Dow Jones consensus estimate of just 50,000 new positions.
Key Highlights from the September Jobs Report
The September figure marks a significant rebound from a revised August report, which now shows a loss of 4,000 jobs. Furthermore, the initially reported job numbers for July were also adjusted downward by 7,000, bringing the final tally for that month to 72,000. This data finally ended a prolonged information drought for economists and policymakers.
Despite the strong job creation, the headline unemployment rate experienced an uptick, edging higher to 4.4%. This is the highest level the rate has reached since October 2021. However, a broader measure of unemployment, which includes individuals working part-time for economic reasons and those marginally attached to the workforce, saw a slight decrease to 8%.
Sectoral Analysis: Winners and Losers
The job gains were not uniform across the economy. The increase was primarily driven by three key sectors:
- Health care led the pack, adding a substantial 43,000 jobs.
- Bars and restaurants contributed a healthy 37,000 new positions.
- Social assistance saw an increase of 14,000 jobs.
On the other hand, several sectors faced contractions. The transportation and warehousing sector was hit hardest, losing 25,000 jobs. Professional and business services declined by 20,000, largely due to a significant drop of 16,000 in temporary help services. Federal government employment also saw a small reduction of 3,000 jobs.
Wage Growth and Labour Force Participation
On the wage front, average hourly earnings grew by 0.2% for the month and 3.8% year-on-year. Both figures came in slightly above analyst forecasts, indicating persistent but moderating wage pressure.
A separate household survey revealed encouraging signs about the workforce's composition. The labour force grew by a substantial 470,000 people, reaching a record 171.2 million. This pushed the labour force participation rate to 62.4%, its highest level since May. A deeper look shows that full-time employment surged by 673,000, while part-time employment fell by 573,000, suggesting a shift towards more stable work arrangements.
Expert Views and Federal Reserve Outlook
Economists noted the mixed signals within the report. Daniel Zhao, chief economist at Glassdoor, told Reuters, "September’s jobs report shows the labour market still had resilience before the shutdown, beating payroll expectations, but the picture remains muddy with August jobs revised to a job loss and the unemployment rate increasing."
Seema Shah, chief global strategist at Principal Asset Management, highlighted the market's reaction in a conversation with Bloomberg, "Equities like the fact that payrolls were stronger than expected, suggesting the economy is still on a firm footing, while the bond market likes the rise in unemployment and slowdown in wage growth."
This September report is the last major piece of labour market data before the Federal Reserve's upcoming meeting. Policymakers, who have already cut the benchmark interest rate in September and October, will scrutinize this data to decide on the future path of monetary policy. The BLS has announced that data for October and November will be released together on December 9, adding another layer of complexity to the Fed's decision-making process.
