Updated Oct 6, 2023 - Economy

U.S. economy adds staggering 336,000 jobs in September

Data: Bureau of Labor Statistics; Chart: Axios Visuals
Data: Bureau of Labor Statistics; Chart: Axios Visuals

The U.S. economy added a staggering 336,000 jobs in September, defying expectations of a slowdown, with the unemployment rate holding steady at 3.8%, according to new data the Labor Department released Friday.

Why it matters: The new data reverses what had been signs of a definitive cooling in the labor market. A less-frothy job market is a key objective of the Federal Reserve's campaign to tamp down inflation.

  • Wall Street economists had expected employers to add 173,000 jobs during the month, per a Bloomberg survey. The unemployment rate was expected to edge down to 3.7%.
  • "Overall, the report suggests the labor market is enjoying a soft landing. If payrolls continue to rise at an elevated pace, then the Fed might be tempted to push on with further rate hikes," Paul Ashworth, Chief North America economist at Capital Economics, wrote in a research note.

Driving the news: Against a backdrop of soaring interest rates that should be crimping economic activity, the jobs data surprised a market that's turned gloomy since the fourth quarter began.

  • Job gains were surprisingly broad and robust, with increases seen in leisure and hospitality, government, professional services and science, the data showed.
  • Employers added 119,000 more jobs in July and August than previously estimated, Labor said, with
  • The labor participation rate held steady at 62.8%.

By the numbers: Beyond the strong headline numbers, the Bureau of Labor Statistics noted there was very little change in underlying data watched closely by economists.

  • Unemployment rates among key groups like women, people of color and teenagers were largely unmoved from August's data.
  • Still, leisure and hospitality posted an above average monthly gain of 96,000, the department reported. The other major gain was seen in government employment, which jumped by 73,000, also at a stronger-than-usual pace.
  • Separately, the health care sector added 41,000 jobs last month, which was below the average monthly gain of the prior 12 month; yet employment trended higher in key segments like services, hospitals and nursing/residential facilities, the BLS stated.
  • The number of long-term unemployed (those jobless for 27 weeks or more) held steady around 1.2 million. That cohort accounted for about 19% of all unemployed people, the BLS noted.

Yes, but: Wage growth was measured, with average hourly earnings rising 0.2% for the month.

  • Hourly earnings are up 4.2% over the last 12 months, which is the lowest since June 2021. That will help calm the Fed's worries about spiraling wages fueling inflation.

Stock futures turned sharply lower in pre-market trading, with Wall Street reacting badly to the stronger-than-expected job gains as investors preemptively brace themselves for more hawkishness from the Fed.

What they're saying: "Friday's jobs report suggests that the labor market remains very strong and cements the case for an additional Fed rate hike this year, and it also likely delays the pace of eventual rate cuts," said Robert Schein, chief investment officer at Palm Beach-based Blanke Schein Wealth Management, on Friday.

  • "Investors will need to get used to the higher for longer narrative on interest rates given the strength of the economy."

Editor's note: This story was updated with additional detail and a new chart.

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