Employers added 254,000 jobs in September, reflecting strong gains as election nears

WASHINGTON - U.S. employers added 254,000 jobs and the unemployment rate ticked down to 4.1 percent in September, signaling signs of strength in the labor market heading into the height of the election season.

The last several months of steady job growth have been plenty enough to keep the American labor market firmly out of recession territory, economists say, especially as GDP growth remains hardy, productivity is strong and consumers continue to spend.

In September, the service sector industry recorded a surge in hiring, according to the report by the Bureau of Labor Statistics. But job gains across most sectors added more evidence that the Federal Reserve can stay on track with gradual lowering of interest rates to ensure inflation doesn’t rear back up.

“This was a very encouraging payroll report, with job growth handily beating expectations,” Sonu Varghese, Global Macro Strategist at Carson Group in an analyst note. “The fact that inflation is easing at the same time means productivity growth is strong, and that should keep the Fed on track for more rate cuts — an added tailwind for the economy and markets.”

Policymakers say the strong data reflects the successful efforts of government spending on covid relief, manufacturing and the clean energy investments, while lowering inflation and maintaining a robust labor market for American workers.

The unemployment rate in September fell for many demographic groups, including both men and women. Joblessness among Black workers fell to 5.7 percent, retreating after a recent rise. The unemployment rate for Hispanic workers also fell, to 5.1 percent.

Wage growth in September was robust, growing by 0.4 percent over the month. Average hourly earnings have risen by 4 percent this year, to $35.36. an hour, outpacing the rate of inflation, resulting in a boost to workers’ pocketbooks.

Strong upward revisions to job gains in July and August data also suggest that the labor market is healthier than previously thought.

Food services and bars led payroll gains, rising by 69,000. That far exceeds the average monthly gain of 14,000 jobs over the past year, as Americans benefiting from wage gains have more disposable income to spend on going out. At the same time, these jobs tend to be lower-paying, less stable positions typically staffed by women and minorities.

Health care, fueled by the demands of an aging baby boomer population, added 45,000 jobs, mostly in hospitals, nursing homes and home health care. Government added 31,000 jobs, primarily at the state and local levels. Social assistance, which includes services for individuals and families, added 27,000 jobs, while construction grew by 25,000 jobs, mostly fueled by a boom in the Biden administration’s spending on projects such as the Bipartisan Infrastructure Law and the CHIPS and Science Act.

Many industries are still weighed down by high interest rates. Employment levels in wholesale trade, financial services, and transportation and warehousing barely budged.

One major industry to lose jobs was manufacturing partly due to weaker activity in that sector as well as retirements, regional hiring challenges, and skills shortages. The sector lost 7,000 jobs, which is significant because they tend to be higher income opportunities for non-college-educated workers. (Source: The Washington Post)