According to the September Bureau of Labor Statistics jobs report, non-farm payroll employment increased by 263,000, down from the 315,000 increase seen in August, but this is still a strong increase that is generally in line with experts’ projections. The number for September was the lowest since April 2021, although it was still high relative to the normal reading prior to the outbreak.
Preston Caldwell, senior economist at Morningstar, stated that the study “doesn’t shift the Fed’s balance one way or the other.”
The figures support a slowing down of the labour market, not a cooling down.
According to Caldwell, pay growth is advancing at a rate that is likely to cut core inflation in the foreseeable future even though employment growth is still firmly positive. He continued, “The Fed’s eyes are still fixed on the inflation figures.”
Non-farm payrolls have grown steadily at a rate of about 0. 25% since May 2022, which is slower than the rate witnessed in prior months and throughout 2021, according to the study.
The Labor Department said the notable job gains came from the leisure, hospitality and healthcare sectors in September. The unemployment rate fell to a pre-pandemic level of 3. 5% in September, after jumping to 3. 7% in August. The Labor Department reported that the number of unemployed fell to 5. 8 million in September.
Although the employment rate returned to its pre-pandemic level in September, “we still expect job growth to slow significantly over the next year,” according to Caldwell.
According to the Labor Department, the leisure, hospitality, and healthcare industries saw significant job growth in September. After increasing to 3. 7% in August, the jobless rate dropped to 3. 5% in September, its pre-pandemic level. According to the Labor Department, there were 5. 8 million fewer unemployed people in September.
Despite the fact that the employment rate reached its pre-pandemic level in September, Caldwell stated that “we still expect job growth to decline dramatically over the coming year.”
Given that the “return to normal” period for customers is now largely gone, Caldwell observes that the quick rate of hiring in restaurants and other leisure services is expected to start slowing.
Education and health services have been the main contributors to employment wages during the last three months. The Labor Department said that health care employment increased by 60,000 in its September jobs report, reaching its level from February 2020.
In addition to the month’s increased employment rate, salary growth accelerated sharply in September. All non-farm payroll employees saw an increase in average hourly pay of 0. 3% to $32. 46, or 5. 0%, over the previous year. After reaching a peak of 5. 3% in July, the three-month average wage growth was 4. 4% through September (on an annual basis).
Now, pay growth is roughly in line with the annual inflation rate of 3%, which is much more in line with the average rate that was in effect during the previous year.
The job vacancy rate decreased significantly in August, according to data from this week’s relevant job vacancy and labour turnover survey. Caldwell considers it good news for the effort to combat inflation. Overwhelming demand for labour can result in inflation by driving up wages too quickly.
The September jobs report had little bearing on predictions of impending Fed actions.
The Federal Reserve is still expected to raise the federal funds target rate by 0 basis points, according to futures prices in the bond market.
75 percent during its policy-making meeting in November. This would result in a substantial increase in the funds rate objective from the beginning of the year, when the funds rate was practically zero, to 3. 75% to 4. 00%.
The market predicts a 70% possibility of an extra 0. 50% hike for the December meeting. The likelihood of an additional 0.75 percentage point gain in that month, however, is considerable given that the proportion more than quadrupled to 16% from 7% before to the release of the jobs data.
Furthermore, Caldwell contends that the Fed won’t stop raising interest rates in the face of continuously high inflation unless there are significant job losses.
The US jobs report indicates “continuing economic growth.”
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