?The US economy added 254,000 jobs last month and the unemployment rate dropped to 4.1%.
?That’s a huge boost for a labor market that has shown signs of weakness.
?Economists had projected 140,000 jobs were added in September and that the unemployment rate held steady at 4.2%.
?The jobs report has moved back into the spotlight now that the Federal Reserve has all but declared victory on inflation and is focused on keeping the labor market healthy.
Our live coverage has ended. Read more on the jobs report here.
Stocks rose Friday as Wall Street cheered the US economy’s display of resilience.
The Dow rose 341 points, or 0.8%, to close at a fresh record high of 42,352.75. The S&P 500 gained 0.9% and the Nasdaq Composite added 1.2%. All three major indexes ended the week higher.
That comes after data Friday showed the economy added a whopping 254,000 jobs last month, blowing past economists’ estimates. The gangbusters figure has raised optimism on Wall Street that the economy will achieve a soft landing, or a scenario in which inflation comes down and there’s no recession.
Traders see a 96% expectation that the Federal Reserve will cut rates by a quarter point at its November policy meeting, according to the CME FedWatch Tool. That’s up from a 68% chance yesterday.
Investors are now shifting their attention to key inflation reports due next week. The Consumer Price Index and Producer Price Index reports are both on deck. Earnings season also kicks off next week, with big banks including JPMorgan Chase and Wells Fargo set to report quarterly results.
As stocks settle after the trading day, levels might change slightly.
President Joe Biden seized on two fronts of good economic news Friday — making his first appearance in the White House briefing room as president to celebrate a swift end to the port strike and a stronger-than-expected jobs report — and pushing back on critics who called the numbers fake.
“I’m going to be very careful here, but if you notice anything the MAGA Republicans don’t like they call fake,” Biden told reporters.?“The job numbers are what the job numbers are. They’re real. They’re sincere.”
Biden said the healthy September jobs report showed the administration had proven critics wrong.
“The simple fact is, we’ve gone from economy in crisis to literally having the strongest economy in the world,” Biden said.
The president also congratulated the Union and port owners coming to an agreement that will keep East Coast and Gulf ports open, saying they had “averted what could have been come a major crisis for the country.”
In addition to strong job gains and a boost in workers’ pay, September’s jobs report also showed that the jobless rate dropped as well, landing at 4.1% (unrounded 4.051%).
The retreat in the unemployment rate partly reverses an upward trend seen during much of the past year.
However, while the unemployment rate has marched higher, it hasn’t been entirely due to negative reasons, economists have said. Jobless claims (a proxy for layoffs) have increased but not spiked; and since the government’s measure of unemployment captures folks who are actively looking for a job, the jobless rate also includes new entrants and reentrants to the labor force.
The mechanics for the unemployment rate dipping lower in September were as follows (as laid out by Michael Feroli, chief US economist at JPMorgan, in a note issued Friday):
The household survey (one of two that feed into the monthly jobs report) showed a 430,000 increase in employment and a 281,000 decrease in the ranks of the unemployed, which was the largest decline since early 2022.
“All categories of the unemployed — job losers, leavers, new and reentrants — declined last month, and the flows from unemployed to employed last month was the highest since early 2022,” he wrote.
When looking at the monthly jobs report, it’s important to keep in mind that data is volatile, it is fluid, and it will be revised as more comprehensive information becomes available.
“It’s difficult to get an accurate first-time read on the labor market, so we always want to have some healthy skepticism,” Josh Hirt, senior US economist at Vanguard, told CNN on Friday. “It is very common that these do get revised.”
And, considering the establishment survey had a response rate of 62% (versus 68% last year), the outsized gains will likely get cut back in future months, Pantheon Macroeconomics economists noted Friday.
The monthly estimates are considered preliminary when first published, because not all respondents report their payroll data in time. Those survey-based estimates are revised twice further and then held constant until the Bureau of Labor Statistics applies its robust “benchmarking” process to square the estimates with quarterly tax filings.
With that in mind, on Friday we learned that July’s previously weak job gains that cratered markets weren’t as bad as initially feared: After coming in at 114,000 and then getting revised down to 89,000, the final revision came in at 144,000.
August’s 142,000 job gains were revised up by 17,000 to 159,000.
While most of the jobs reports have been downwardly revised in recent months, the last time there was a similarly big upward revision to the two preceding months’ reports was in September 2023, BLS data shows.
While September’s employment data is expected to stay relatively tame, the same can’t be said for the October jobs report, which is set to be released on November 1, just days before the presidential election.
That month’s data could very well be heavily distorted by three significant disruptions: the devastation from Hurricane Helene; the ongoing Boeing machinists’ strike; and the short-lived but massive strike at US ports along the East and Gulf Coasts.
The strikes and hurricane-related effects “are not going to permanently alter the trajectory of the labor market; but September is probably our last clean reading on the labor market for a while,” Ryan Sweet, chief US economist at Oxford Economics, told CNN.
If the Boeing strike continues through the payroll reference period of October 12, it will “subtract from employment,” he said.
“Tack on Hurricane Helene, and there’s the possibility that employment drops or declines in October,” he added.
Even though the cause would be temporary, the US hasn’t had a negative jobs report since December 2020, when Covid cases had a resurgence.
“The next two employment reports will be critical in shaping the Fed’s November policy decision,” Lydia Boussour, senior economist at EY-Parthenon, wrote Wednesday in a note.
The Dow turned positive again Friday midday as investors reviewed the stronger-than-expected September jobs report.
The Dow rose 129 points, or 0.3%. The S&P 500 gained 0.3% and the Nasdaq Composite added 0.6%.
All three major indexes are on pace to end the week lower after escalating conflict in the Middle East spooked Wall Street.
President Joe Biden touted the better-than-expected jobs data in a post on X Friday morning.
“Great news for American workers and families: Today, we learned our economy gained over 250,000 new jobs in September and unemployment is back down at 4.1%. With today’s report, we’ve created 16 million jobs, unemployment remains low, and wages are growing faster than prices,” according to the post.
For several years, economists have been searching for signs that a recession could be imminent. After all, it’s not uncommon for the Federal Reserve to raise interest rates aggressively to get inflation down. But a recession hasn’t materialized, and Fed Chair Jerome Powell isn’t bracing for one either.
“There’s really nothing that I can point to in the economy that suggests that a downturn is more likely than it is at any time,” he said earlier this week.
By contrast, he said, recent gross domestic product readings are supporting his view that the economy is on “solid” footing, he told attendees at the National Association for Business Economics’ annual conference on Monday.
The September jobs report also showed an uptick in wage growth, with average hourly earnings growing by 0.4% for the month. That brings the annual rate up to 4% from 3.9% seen in August, according to Friday’s report.
“There are many signs that workers and their families are enjoying higher living standards than they were before the pandemic hit,” Elise Gould, senior economist at the Economic Policy Institute, told CNN.
But, she cautioned, even though most people are more likely to have a job and more likely to have higher wages, that doesn’t mean there isn’t still pain in the labor market or within household finances.
But the trajectory ?has been one of improvement, she noted.
“Nominal wages have been rising faster than inflation for at least 16 months in a row now,” she said. “When you compare back before that inflation spike, back to 2019, real wages are up and their purchasing power is up, so living standards are increasing.”
The stock rally lost steam Friday morning as investors continued to parse the September jobs report.
The Dow fell 19 points, or 0.05%. The S&P 500 gained 0.2% and the Nasdaq Composite added 0.4%.
Friday’s shockingly robust?jobs?report for September shows the?Federal Reserve?may not need to deliver another supersized interest rate cut next month.
When the?Fed?slashed?rates?by half a point last month, the central bank’s leader, Jerome?Powell, said in a news conference that decision was aimed to protect the labor market’s strength, since?inflation?has seemingly come under control.
Some economists deemed that a so-called “insurance cut.” In addition to stabilizing prices, the?Fed?is also mandated by Congress to promote maximum?employment, and with price pressures now mostly tamed, central bankers are more focused on the health of America’s job market.
Since employers are still hiring at a solid pace and?unemployment?hasn’t continued to climb, after joblessness steadily picked up over the past year, that means?Fed?officials don’t need to take any more aggressive action to prevent the labor market from deteriorating. That just doesn’t seem to be happening at the moment, at least according to government data. A separate report out earlier this week showed that job openings unexpectedly rose in August, remaining above pre-pandemic levels.
“These results likely take a 50 basis point rate cut off the table for the?Fed’s next meeting in November, barring that next month’s?jobs?report isn’t a disaster,” Bret Kenwell, US investment analyst at eToro, wrote in a Friday note. “While one report doesn’t necessarily give investors the “all-clear” sign, it’s a huge step in the right direction and the September?jobs?report was certainly a statement.”
Some?Fed?officials had already said they preferred to cut?rates?more carefully moving forward — even before the release of the stunning September?jobs?report.
“After 50 basis points, we’re still in a net tight position so I was comfortable taking a larger first step,” Minneapolis?Fed?President Neel Kashkari told CNBC last week. “As we go forward, I expect, on balance, we will probably take smaller steps unless the data changes materially.”
Investors are overwhelmingly betting that the?Fed?will cut by a quarter point at its next policy meeting on November 6-7, according to the futures market.
Stocks gained Friday morning as investors parsed the eye-popping figures in the latest jobs report.
The Dow rose 243 points, or 0.6%. The S&P 500 gained 0.8% and the Nasdaq Composite added 1.2%.
The US economy added a staggering 254,000 jobs in September, blowing past economists’ expectations of 140,000 job gains. The unemployment rate ticked lower to 4.1%, below projections it would remain steady at 4.2%.
The strong picture of the US job market has boosted optimism on Wall Street that the US economy is headed for a soft landing, or a scenario in which inflation comes down without a recession.
The Federal Reserve last month cut interest rates by a jumbo half point, and investors have waffled over whether the central bank will cut rates by a quarter- or half-point next month.
Bets for a quarter-point cut in November rose following the latest jobs report, according to the CME FedWatch Tool.
Unemployment?declined broadly last month.
Joblessness among Hispanic workers and Black workers fell sharply in September, the Labor Department said Friday.
The Hispanic?unemployment?rate fell to 5.1% from 5.5%, the lowest level since June.
The Black?unemployment?rate decreased to 5.7% from 6.1%, marking a five-month low.
Unemployment?among White Americans fell to 3.6% in September from 3.8% in August.
The number of Asian Americans who want a job but can’t find one held steady last month, with their?unemployment?rate unchanged at 4.1%.
The?unemployment?rate overall edged lower in September to 4.1% from 4.2%.
The September employment report shows “a truly monster jobs number,” said Chris Rupkey, chief economist at FwdBonds LLC.
“The economic expansion remains on course for now,” he wrote in commentary issued Friday.
“The outlook for the economy in the months ahead is quite favorable according to the September jobs report. The economy could end the year on a high note after weathering the growth and employment markets scare a couple of months ago.”
The September jobs report was much stronger than expected, giving the Federal Reserve “flexibility to either cut interest rates by [a quarter point] at their next meeting, or take a pause and revisit a potential rate cut in December,” said Glen Smith, chief investment officer at GDS Wealth Management.
“It was still the right decision for the Fed to cut rates by a deeper [half point] in September, which was essentially an insurance policy for the Fed to guard against any risk of a deterioration of the labor market, which had been slowing prior to Friday’s report,” he wrote in a note Friday morning.
Here’s what investors have to say about the latest look at the US economy:
The usual industries that have seen robust job growth this year carried on with their momentum last month, such as health care, government and construction. Restaurants and bars joined the party this time.
The private education and health services sector was America’s top job creator in September, adding 81,000?jobs, according to fresh Labor Department data released Friday. The health care industry contributed 45,000 of those?jobs, specifically in home health care services, hospitals, and nursing and residential care facilities.
The sector with the second-strongest payroll growth last month was leisure and hospitality, which was surprising because hiring by those employers had been tepid over the past six months. The sector grew by 78,000 employees in September, the bulk of that gain thanks to restaurants and bars, which contributed 69,000 of those?jobs.
Last month’s surge in new employees at restaurants and bars was “well above the average monthly gain of 14,000 over the prior 12 months,” the government said in a release.
Consumer spending on food services has been healthy in recent months, according to Commerce Department figures.
Stocks futures rose Friday morning as Wall Street parsed the stunningly strong September labor report.
Dow futures jumped 118 points. S&P 500 futures rose 0.4% and Nasdaq-100 futures gained 0.6%.
Treasury yields jumped following the report.
US job growth accelerated much more than anticipated last month, providing further reassurance for the ongoing stability of the labor market.
Employers added an estimated 254,000?jobs?in September, according to data released Friday by the Bureau of Labor Statistics. That’s a higher tally than August’s monthly total (which was upwardly revised to 159,000) and blows economists’ expectations for a 140,000-job gain out of the water.
The?unemployment?rate dropped to 4.1% from 4.2%, the BLS report showed.
The?Federal Reserve, now keenly focused on protecting the labor market as high?inflation?appears to have been tamed, is closely scrutinizing?employment?data for any signs of weakness.
Federal Reserve Chair Jerome Powell and his colleagues at the central bank are keenly aware that the labor market is weakening.
“By so many measures, the labor market is still solid, but it really has cooled,” Powell said at an economics conference held in Nashville, Tennessee, earlier this week. “If you’re out of work now, it’s going to be harder to find a job than it was two years ago when the labor market was extremely tight.”
At the same time, Powell and other Fed officials have said they don’t want to see the labor market weaken even further than it has, which is why most voted to lower interest rates by a half point last month versus the more typical quarter-point cut.
Fed Governor Michelle Bowman, who favored a quarter-point cut last meeting, said the unemployment rate, which has risen from 3.7% at the start of this year to 4.2% as of August, “largely reflects weaker hiring, as job seekers entering or re-entering the labor force are taking longer to find work, while layoffs remain low.”
But there’s another factor that’s contributing: “A mismatch between the skills of the new workers and available jobs,” Bowman said at a banking conference in Charleston, South Carolina earlier this week. In other words, the people looking for work aren’t able to find jobs because they don’t have the qualifications employers are looking for in candidates to fill openings.
Wall Street estimates vary widely for the September jobs data — from 70,000 to 220,000 positions added last month — but most traders agree that the employment snapshot will show modest growth.
Dow futures were up by 0.1% early Friday, and futures tied to the S&P 500 and Nasdaq were higher by 0.3% and 0.4%, respectively.
The end of the port workers’ strike has lifted some pressure from markets, but ongoing tension in the Middle East is keeping Wall Street’s fear gauge, the Cboe Volatility Index, at an elevated level.
The labor market has been on a cooling trend for a while now as it settles back into balance following the pandemic and it absorbs the drastic ramp-up in inflation-busting interest rate hikes.
The weaker-than-expected July report (a surprisingly low 114,000 monthly total that was revised lower to 89,000) and a subsequent annual data revision that indicated slower job growth for the year ended in March 2024 exposed pain points and raised red flags that the labor market was maybe not slowing but actually crashing.
The August jobs report, which showed better-than-expected estimated 142,000 payroll gains and a drop in the unemployment rate, went a long way to quell those fears.
September could have the same effect: Economists project that the US added 140,000 jobs in September and that the unemployment rate held steady at 4.2%, according to FactSet estimates.
“The labor market is pretty strong right now,” said Erica Groshen, a former Bureau of Labor Statistics commissioner who is a senior economics adviser at the Cornell University School of Industrial and Labor Relations.
“It’s tailed off a little bit from the dizzying heights a few months ago,” she added. “Unemployment is still very low. Job growth is probably somewhere around a sustainable level.”
Here’s what investors are looking to ahead of the September jobs report release at 8:30 am ET:
The number of available jobs in the US grew in August, according to the latest Job Openings and Labor Turnover Survey.
That signals an undercurrent of strength in the labor market at a time when its vitals are being carefully monitored by the Federal Reserve.
There were an estimated 8.04 million job openings in August, an increase from an upwardly revised 7.71 million in July, according to the data released Wednesday by the Bureau of Labor Statistics.
The latest tally equates to 1.1 available jobs for every person looking for one, BLS data shows.
Economists were expecting the number of available jobs to land at 7.682 million,?a slight increase from July’s initial total, according to FactSet consensus estimates.
The latest Job Openings and Labor Turnover Survey report showed that workers appear to be taking a wait-and-see approach.
As the labor market slows and opportunities wane, more workers are staying put: The number of people voluntarily quitting their jobs fell to 3.084 million, the lowest level since September 2020, according to the Labor Department data released on Tuesday.
Outside of the pandemic, the 1.9% quits rate, which measures voluntary separations as a percentage of total employment, is the lowest seen since 2015.
“We’re still months away from a potential robust jobs market, and workers understand this and continue to quit their jobs at a slower pace,” Robert Frick, corporate economist at Navy Federal Credit Union, wrote in commentary issued Tuesday.
The Federal Reserve’s recent half-point cut will take some time to work through the system, Noah Yosif, chief economist and head of research at the American Staffing Association, told CNN.
“Just because the Federal Reserve votes to decrease interest rates in September does not mean that employers are going to see lower costs in October,” he said, adding that it could take three to six months to filter through to businesses.
More rate cuts are expected for later this year, but the extent will depend on the health of the labor market, and that outlook could be quite murky due to impact from the strikes and Hurricane Helene.
Fed officials, who are scheduled to make the central bank’s next interest rate decision just days after the October jobs report lands, will do their best to look through the noise and what are likely idiosyncratic factors, said Ryan Sweet at Oxford Economics.
Ejindu Ume, associate professor of economics at Miami University in Ohio, told CNN: “We’re already seeing mixed data in terms of weakness and the strength of the labor market, but these new developments could put more risk into the system: more risk of people being laid off, more risk of the unemployment rate continuing to pick up. So that makes the Fed’s job even more challenging.”
Claims for unemployment benefits, which are considered a proxy for layoffs, have increased over the past year but remained relatively steady.
Initial claims for?unemployment?insurance, a closely watched metric that serves as a proxy for layoff activity, grew by 6,000 to 225,000 for the week ended September 28, according to the report.
Such an increase was anticipated, economists for Pantheon Macroeconomics said late Wednesday, noting rolling furloughs that are taking place at Boeing facilities in Washington and Oregon following the strike of 32,000 machinists.
Both states had an increase in first-time claims last week, according to Thursday’s report.
Despite the uptick, weekly claims filings remain in line with what was seen pre-pandemic and below historical averages: In the decade before the pandemic, weekly claims for?unemployment?benefits averaged 311,000, Labor Department data shows.
Still, they’re likely to move much higher in the weeks to come.
“Looking ahead, we expect claims to shoot up over coming weeks, perhaps to a peak of about 250K in the week ending October 12,” according to the Pantheon note.
Hiring activity in the US private sector bounced back in September, according to new data released earlier this week from payroll processor ADP.
Private sector?employment?grew by an estimated 143,000?jobs?last month, according to the latest monthly?employment?report from ADP. That’s better than the 125,000-job gain economists were expecting, according to FactSet estimates. It also marked a rebound from the month prior when 103,000?jobs?were added.
The gains were widespread across major industries with only the tech-heavy information sector posting losses, according to the report.
Although hiring picked up for the month, wage gains continued to retreat in the softening labor market: Annual pay growth for people who remained at their?jobs?slowed to 4.7% from 4.8% while job-changers saw a sharper decline to 6.6% from 7.3%.
Job growth has slowed substantially during the past year and the?Federal Reserve?is closely scrutinizing?employment?data to ensure the labor market isn’t weakening outright.
“Stronger hiring didn’t require stronger pay growth last month,” Nela Richardson, chief economist, ADP, said in a statement. “Typically, workers who change?jobs?see faster pay growth. But their premium over job-stayers shrank to 1.9%, matching a low we last saw in January.”
