October 4th 2024.
The latest numbers from the Labor Department have shown that the American job market is still going strong, with a surprising addition of 254,000 jobs in September. This is a positive sign, indicating that the economy is growing and there is a steady demand for hiring. The increase in jobs last month was much higher than expected, especially after a relatively modest 159,000 job gain in August. Additionally, the unemployment rate has dropped for the second consecutive month, from 4.2% in August to 4.1% in September.
This trend suggests that companies are still feeling confident enough to fill vacancies despite the challenges posed by high interest rates. While there is a sense of caution in hiring, it is reassuring to note that very few employers are resorting to layoffs. In fact, the Labor Department revised its estimate of job growth in July and August, showing an increase of 72,000 jobs. This is a promising development for the job market.
The job gains in September were widespread, with various industries showing a healthy increase. Restaurants and bars added 69,000 jobs, healthcare companies gained 45,000 jobs, government agencies added 31,000 jobs, social assistance employers gained 27,000 jobs, and construction companies added 25,000 jobs. Even the professional and business services category, which had experienced a decline in jobs for three consecutive months, saw an increase of 17,000 jobs last month.
Not only was there an increase in job numbers, but there was also a rise in average hourly wages. They went up by 0.4% from August, which is slightly lower than the 0.5% increase in the previous month. Compared to the same time last year, hourly wages have seen a 4% increase, slightly higher than the 3.9% rise in August.
The Fed has been making efforts to control inflation, which led to a half-point cut in the benchmark interest rate last month. This was the first rate cut in over four years, with indications of more cuts to come in the future. This decision was made with the intention of making borrowing more affordable and to support the job market. However, with the strong job numbers in September, it is likely that the Fed will reduce its key rate in smaller increments.
Chief economist at Comerica Bank, Bill Adams, commented on the September jobs report, saying that it shows a positive trend in labor demand at the start of autumn. He also added that the US economy is growing steadily in 2024, while inflation is slowing down to meet the Fed's target.
The economy's resilience has been a relief for many, especially considering that there were fears of a recession with the Fed's efforts to control inflation by increasing interest rates 11 times in 2022 and 2023. However, the economy continued to grow despite the high borrowing costs for consumers and businesses. This has led most economists to believe that the Fed has managed to achieve a "soft landing" - successfully taming inflation without triggering a recession.
As the presidential election approaches, the economy is a significant concern for voters. Many Americans are dissatisfied with the economy and high prices, which are still 19% higher on average compared to February 2021. This was when inflation began to surge as the economy rebounded quickly from the pandemic recession, leading to shortages of goods and labor.
The public's dissatisfaction with inflation and the economy has become a political burden for Vice President Kamala Harris in her race for the White House against former President Donald Trump. The October jobs report, which will be released just four days before the election, may be affected by the effects of Hurricane Helene and a strike by Boeing machinists.
However, most indicators in the economy are positive, with the US economy growing at a vigorous 3% annual pace from April to June, boosted by consumer spending and business investment. The Federal Reserve Bank of Atlanta's forecasting tool predicts a slightly slower but healthy growth rate of 2.5% for the July-September quarter. The Institute for Supply Management has also reported a third consecutive month of growth in America's services businesses, indicating a strong service sector that accounts for over 70% of US jobs.
Last month, households increased their spending at retailers, and despite a slowdown in hiring, Americans are experiencing job security. Layoffs are at a near-record low, and the number of people filing for unemployment benefits remains low as well. This is an unusual dynamic, with companies being hesitant to expand their workforce, even though they are reluctant to let go of their current employees. This may be due to many employers being caught off guard and short on staff when the economy began to recover from the pandemic recession. However, the number of job openings has declined steadily, from a peak of 12.2 million in March 2022 to 8 million in August.
Workers have also taken note of the current job market, with fewer people feeling confident enough to leave their jobs to seek better opportunities. In fact, the number of Americans quitting their jobs is at its lowest since August 2020, when the economy was still reeling from the effects of COVID.
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