September Job Growth Surpasses Expectations, Unemployment Rate Declines, and Wages Increase

Unexpected Job Growth in September

The Bureau of Labor Statistics (BLS) recently reported that there was a significant increase in job growth in the United States in September. Despite predictions of a continued downward trend, the US economy added an impressive 254,000 jobs, the largest monthly increase since March. This figure exceeded the highest estimate of 220,000 jobs from Jefferies and was a four-sigma beat to the median estimate.

Contextualizing the Job Growth

UBS observed that the six-month moving average for nonfarm payrolls is 167,000. It's estimated that a consistent 150,000 jobs aligns with a return of the economy to trend growth. This suggests that inflation could potentially make a comeback as the Federal Reserve initiates its easing cycle.

Surge in Employment Numbers

Notably, the number of employed individuals also saw a significant increase, with a rise of 430,000, marking the largest one-month jump since March.

Unemployment Rate Drops

The unemployment rate also performed better than expected. Due to the increase in employed workers and a decrease in unemployed workers (from 7.115 million to 6.834 million), the unemployment rate fell from 4.2% to 4.1%. This is a decrease from 4.3% two months ago, which alleviated concerns about a potential recession.

Wage Growth

However, these strong job numbers come at a time when the Federal Reserve is initiating an easing cycle and wages are beginning to rise again. In September, average hourly earnings increased by 0.4% sequentially, surpassing the estimate of 0.3%. On an annual basis, wage growth was 4.0%, up from an upward revised 3.9% and beating the 3.8% estimate.

Bottom Line

While these figures suggest a robust economy with strong job growth, declining unemployment, and rising wages, they also come at a time when the Federal Reserve is initiating an easing cycle. This could potentially lead to a resurgence of inflation. What are your thoughts on these developments? Do you think this trend will continue? Share your thoughts and this article with your friends. Don't forget to sign up for the Daily Briefing, which is delivered every day at 6pm.