The US economy added 336,000 jobs in September — a surprising jump that further solidifies the labor market’s resiliency in the face of the Federal Reserve’s aggressive tightening regime.
The figure marks a sharp increase from the 187,000 jobs gained in August and the 271,000 monthly average recorded over the past 12 months, according to fresh data released by the Bureau of Labor Statistics on Friday.
The report also showed that the unemployment held steady at 3.8% — a low figure compared to historical data, which the BLS attributed to increased unemployment benefits, slower population growth and diminished demand for low-paying jobs.
Last month, unemployment also rose 3.8%, surprising economists who had expected that the Labor Department would report 3.5% unemployment, in line with July’s number.
The unemployment rate has consistency ticked lower since January 2021, when it peaked at 6.3%.
Markets were rocked on this week ahead of the jobs report when the Labor Department released its Job Openings and Labor Turnover Summary, which showed job openings increased to 9.61 million in August — up from 8.9 million in July.
In premarket trading on Friday, the Dow and S&P 500 were each down less than 1% in response to the jobs report, while the Nasdaq was up about 0.5%.
However, all three major indexes plunged more than 1% Tuesday following the JOLTS report. And all the while, the benchmark Treasury yields hit 16-year highs and the average rate on a 30-year fixed mortgage neared 8%.
Private-sector jobs, however, added a mere 89,000 jobs in September, according to ADP, well below the 153,000 advance in private-sector hiring economists anticipated.
Fed officials have said they think strong hiring can often fuel inflation if companies feel compelled to raise pay to attract and keep workers.
Thus, a slowdown in job growth and pay raises could help the Fed reach its 2% inflation target.
The latest Consumer Price Index — a closely-watched measure of inflation that tracks changes in the costs of everyday goods and services — rose a stiff 3.7% in August.
Rising gasoline costs were blamed for the surprising acceleration. Gas ticked 10.6% higher in August, the CPI report showed, accounting for over half of the increase.
However, the 3.7% figure still represents a stark slowdown from last summer when inflation hit a four-decade peak at 9.1%. Still, it remains well above the Fed’s 2% goal and marks an acceleration from the previous two months. In June, inflation bottomed out at 3%, and rose to 3.2% in July.
The next CPI will be released on Oct. 12.
Fed Chair Jerome Powell has said that central bankers will be taking a “data-dependent approach” moving forward, leaving more interest rate hikes before year’s end up in the air.
The central bank has worked to bring down stubbornly high inflation by hiking rates another 25 basis points to a 22-year high in August in hopes of an economic slowdown.
The benchmark federal funds rate currently sits between 5.25% and 5.5%. Last month, Fed officials unanimously decided to hold the record-high rate steady for the second time in six policy meetings so far this year.
“The US banking system is sound and resilient,” the Fed said last month in a statement that was minimally changed from remarks following its July meeting.
The Fed noted that the economy has been expanding at a “solid” pace — an update from a “moderate” pace.
Though consumers have continued to feel a reprieve from the Fed’s aggressive tightening regime, the labor market has shown surprising resiliency over the last couple of months.
Employers have only recently begun to slow hiring.
Thanks to a strong labor market, the US economy has avoided a downturn, and even the Fed has said it’s no longer predicting the economy will slip into a recession by the end of the year.
The JOLTS report — which provides overall data for hiring, job postings and the number of people quitting their jobs — fueled worries the Fed may need to keep interest rates high to tamp down the resilient job market, and sent the Dow careening to its worst day since May.
The Dow plummeted 430.97 points, or 1.3%, to 33,002.38, while the Nasdaq dropped 248.31 points, or 1.9%, to 13,059.47 – the lowest level for both since May 31.
The S&P 500 lost 58.94 points, or 1.4%, at 4,229.45 – its lowest level since June 1.