The economy beat expectations in September and added 336,000 jobs, the Bureau of Labor Statistics reported Friday, a sign that the labor market has momentum despite the Federal Reserve’s interest rate hikes.
The jobs will bolster the messaging coming out of the White House, which has been working to credit President Joe Biden for the strong job creation over the past year.
The report shows that jobs are still being added and that the unemployment rate still remains low by historical standards. The unemployment rate remained at 3.8% in September.
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The Fed has carried out a historic effort to tighten monetary policy in response to the inflation that has wracked households over the past few years. Annual inflation, as measured by the consumer price index, fell from more than 9% last June to just over 3.7% as of last month.
Still, the central bank is targeting 2% long-run inflation, so there is a chance that the Fed will have to jack up rates further. In the gauge favored by the Fed, the consumption expenditures index, prices rose at a 3.5% annual rate in August, according to a report released last week.
The latest report, given the indications that the labor market is still humming right along, could increase the odds that the Fed will hold rates high for longer and could be a sign that the central bank could raise its interest rate target yet again.
The Fed’s target range is now 5.25% to 5.50%, still the highest level in more than two decades. Higher interest rates are meant to have the effect of slowing borrowing and investment, dampening overall commerce. Many economists fear that the rate-hike cycle will end in a recession.
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Gross domestic product growth has remained surprisingly buoyant despite the rate hikes.
The Bureau of Economic Analysis reported last week that the economy grew at a 2.1% annual rate in the second quarter of this year, near the 2.2% pace the quarter before — surprisingly strong growth given how high interest rates have risen.