The job market has defied an array of threats this year, notably high inflation and the rapid series of Fed interest rate hikes.
The nation’s employers added 336,000 jobs in September, an unexpectedly robust gain and the largest monthly rise since January, evidence that many companies remain confident enough to keep hiring despite high interest rates and a hazy outlook for the economy.
Last month’s job growth jumped from a 227,000 increase in August, which was revised sharply higher. July’s gain was also more than had been initially estimated. The economy has now added an average of 266,000 jobs a month for the past three months, a streak that could make it likelier that the Federal Reserve will raise its key rate again before year’s end as it continues its drive to tame inflation.
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Friday’s report from the Labor Department also showed that the unemployment rate was unchanged at 3.8%, not far above a half-century low.
The job market has defied an array of threats this year, notably high inflation and the rapid series of Fed interest rate hikes that were intended to conquer it. Though the Fed’s hikes have made loans much costlier, steady job growth has helped fuel consumer spending and kept the economy growing, defying long-standing predictions of a forthcoming recession.
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The jobs data sets up some difficult decisions for Chair Jerome Powell and other Fed policymakers. Solid hiring could lead them to raise their key rate in November or December, because strong job gains suggest an economy growing too fast for inflation to cool. By raising borrowing costs, the Fed intends to slow spending by businesses and consumers.
Yet some data in Friday’s jobs report raised the possibility that inflation could still ease even as hiring stays healthy. Notably, wage growth slowed in September, with average hourly pay rising 4.2% from a year earlier. That is still solid and slightly above inflation, but it was the slowest such figure in more than two years.
The Fed has been concerned that if pay rises too fast, companies will boost prices to cover higher labor costs, thereby fueling inflation. September’s slower pace of wage growth might help allay that concern.
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In addition, long-term interest rates have spiked in the past two months, making loans more expensive across the economy and potentially serving as a brake on economic growth and inflation.
