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US job growth sizzles; wage inflation cooling
PHOTO: AFP/FILE
REUTERS, Washington
US employment increased by the most in eight months in September as hiring rose broadly, pointing to persistent labor market strength that could give the Federal Reserve ammunition to raise interest rates again, though wage growth is slowing.
The larger-than-expected surge in nonfarm payrolls last month and sharp upward revisions to July and August’s jobs counts reported by the Labor Department in its closely watched employment report on Friday cemented expectations that economic activity accelerated in the third quarter.
The labor market and the broader economy’s resilience, 18 months after the US central bank started raising rates to cool demand, suggest that monetary policy could remain tight for some time. The report followed news this week that job openings jumped in August and first-time applications for state unemployment benefits remained low in September.
Financial markets and most economists believe the Fed is probably done hiking rates because long-term US Treasury yields have jumped to 16-year highs.
“With bond yields soaring, the dollar strengthening, and equity market volatility increasing there is a renewed tightening of financial conditions that does some of the work for the Fed, so it’s not a done deal the Fed hikes rates again,” said Kathy Bostjancic, chief economist at Nationwide.
Nonfarm payrolls increased by 336,000 jobs last month, the largest rise since January. The economy created 119,000 more jobs than previously reported in July and August. Payroll gains were almost double the 170,000 forecast by economists in a Reuters poll. The economy needs to create roughly 100,000 jobs per month to keep up with growth in the working-age population.
Some economists argued that payrolls had been boosted by difficulties adjusting the data for the return of education workers after the summer break, a notion dismissed by most since private payrolls increased by 263,000 jobs.
“The surge in teachers hired in September cannot belie the strength in payrolls now stretching back to July thanks to the biggest upward revisions to payrolls in a long time,” said Chris Low, chief economist at FHN Financial in New York.
The broad increase in payrolls was led by the leisure and hospitality industry, which added 96,000 jobs. Restaurants and bars dominated, with 61,000 positions created, returning employment in the sector back to its pre-pandemic level.
Government employment increased by 73,000 jobs, driven by state government education and local government, excluding education. Government employment remains below its pre-pandemic level by 9,000 jobs. The healthcare sector added 41,000 jobs, lifted by ambulatory healthcare services, hospitals, nursing and residential care facilities.
There were gains in professional, scientific and technical services employment, though temporary help hiring continued to decline. Employment in the transportation and warehousing industry rose as did retail and construction payrolls, mostly reflecting homebuilding despite mortgage rates being at more than 20-year highs.
There was no impact on payrolls from a strike by the United Auto Workers (UAW) at General Motors, Ford Motor and Chrysler parent Stellantis, which started at the end of the week that the government surveyed businesses for the employment report. Manufacturing payrolls increased by 17,000 jobs.