The U.S. economy added 254,000 jobs last month, blowing estimates out of the water
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The U.S. created more jobs than expected in September, in the first employment report since the Federal Reserve carried out its first interest rate cut since 2020.
Nonfarm payrolls increased 254,000, up from a revised 159,000 in August, data from the Bureau of Labor Statistics released Friday shows. This blew past the 140,000 expected by economists, according to FactSet (FDS) consensus estimates.
The unemployment rate ticked down to 4.1%, falling below the 4.2% anticipated by economists.
In recent months, the job market has begun to show considerable signs of cooling. The unemployment rate has inched upward all year, hitting a high of 4.3% in July — above what the central bank’s Summary of Economic Projections, or the so-called “dot plot,” had expected for this year. Despite ticking down to 4.2% in August, unemployment remains at its highest level since October 2021.
But the job market is giving mixed signals. Job openings hit a three-month high in August, increasing to 8.04 million, according to the Bureau of Labor Statistics Job Openings and Labor Turnover Survey released Tuesday. And while layoffs remained low, the rate at which employers were hiring ticked down to 3.3%.
When the central bank’s decision-making arm, the Federal Open Market Committee, voted to slash interest rates by half-a-percentage point, Fed Chair Jerome Powell emphasized the “recalibration” of policy to focus on the employment situation.
“This recalibration of our policy stance will help maintain the strength of the economy and the labor market and will continue to enable further progress on inflation as we begin the process of moving toward a more neutral stance,” Powell said in a post-meeting news conference.
As the Fed weighs the size of future cuts, the number of jobs created will continue to have a major impact. Shelby McFaddin, investment analyst at Motley Fool Asset Management, said Friday’s report will help the FOMC determine whether it will carry out a 25 or 50 basis-point cut at its next meeting.
“It’s been employment that’s been an issue,” McFaddin said, “the fact that it just kind of started to tumble off of a cliff.”
This is a developing story and will be updated.