The US labor market showed unexpected strength in September, adding 254,000 jobs and lowering the unemployment rate to 4.1%, according to the Labor Department. This figure significantly surpassed economists' expectations of 140,000 new jobs and marked an upward revision of previous months’ gains, with August's numbers adjusted to 159,000 and July's to 144,000.
The robust job growth coincided with the Federal Reserve's first interest rate cuts since 2020, aimed at addressing concerns about a weakening labor market. Following the report, the likelihood of a quarter-point rate cut at the Fed's upcoming meeting in November surged to 91%, while the chances of a half-point cut dropped to 9%.
Job gains were broad-based, particularly in food services and drinking establishments, which saw an increase of 69,000 jobs—far exceeding the average of 14,000 over the past year. Healthcare added 45,000 jobs, while government employment rose by 31,000. Construction also contributed with 25,000 new positions. However, manufacturing faced a setback, losing 7,000 jobs primarily in the auto sector.
The unemployment rate fell from 4.2% in August but remains above the five-decade low of 3.4% recorded earlier this year. Average hourly earnings increased by 4% year-over-year, reflecting ongoing wage growth amidst easing inflation pressures.
Overall, this positive labor market report suggests resilience heading into the presidential election season and indicates that economic growth may continue despite previous concerns about potential recessionary trends.
