Job growth in the United States in September exceeded all preliminary forecasts for the dynamic of the corresponding indicator.
It’s worth noting that last month, the US also recorded an unexpected decrease in the unemployment rate and accelerated wage increases. Against the background of these factors that shape the current configuration of reality in the space of the United States economic system, the likelihood that the Federal Reserve will decide on another large-scale interest rates cut in November is significantly weakening. It is worth mentioning that last month the US financial regulator lowered the cost of borrowing by a half percentage point. This scale of the initial stage of monetary policy easing came as a surprise to many experts, who predicted more moderate primary actions by the central bank of the United States to cut interest rates.
Nonfarm payrolls increased by 254,000 in the US in September. It’s worth noting that this figure is the highest in the last six months, following an upward-revised 72,000 advance over the prior two months.
The unemployment rate in the United States in September was recorded at 4.1%. In August, this figure was 4.2%. In July, the unemployment rate in the United States unexpectedly rose to 4.3%. It is worth noting that within the framework of the dynamic of this indicator, there is a distinct tendency for decline.
Hourly earnings in the United States increased by 4% in September compared to a year ago.
Information about the mentioned indicators was published on Friday, October 4, by the Bureau of Labor Statistics of the United States. These data indicate that the demand for workers in the US is currently at a high level. Also, layoffs continue to be low in the United States. The relevant data will likely become a factor in easing concerns about the state of affairs in the US labor market.
Also, this week, on Tuesday, October 1, data was published according to which in August in the United States, job openings reached an indicator that is a three-month high. Available positions in the mentioned month amounted to 8.04 million. At the same time, in July, the corresponding figure was fixed at 7.71 million. The growth of available positions in August is largely due to an increase in demand for labor in the construction sector. It is worth noting that in this case, a rise in the indicator was recorded, which is the largest in the last 15 years. There is also a growth in available positions in state and local governments. The relevant information is contained in the Bureau of Labor Statistics Job Openings and Labor Turnover Survey. Analysts interviewed by the media expected available positions to reach 7.69 million in August.
At the same time, the hiring rate in August in the United States, according to data released on Tuesday, fell to 3.3%. This figure is the lowest since 2013 if it does not take into account the situation observed during the initial period of the coronavirus pandemic in 2020. The largest decrease in the hiring rate was recorded in sectors such as retail, warehousing, and transportation.
Data released on Friday showed that the number of residents of the United States who worked part-time for economic reasons declined in August. Also, people who lost their jobs were able to find work in other companies and organizations quickly.
The low level of layoffs, as noted by the media, forms a mixed picture of the current state of affairs in the United States labor market. It is worth noting that officials of the US central bank decided during the September meeting to begin easing monetary policy and started to act decisively in the context of the relevant issue, largely to prevent a further slowdown in the mentioned market. They also announced their readiness to cut interest rates by half a point again in November if the weakness persists.
A separate report, published on Tuesday by the Institute for Supply Management, testified that manufacturing activity in the United States continued contracting in September. The appropriate indicator is 47.2. It is worth noting that the mentioned tendency has been observed for the sixth month in a row. The stock indexes of the United States were mostly on a downward trajectory this week. Treasury yields also remained at a low level. Friday was a good day for these indicators.
The S&P 500 opened higher. Treasury and the dollar yields also showed an increase on the back of data released on Friday. Pricing in the swaps market has shown that traders have become less confident that the central bank of the United States will decide in November to lower the cost of borrowing by more than a quarter of a point. Against the background of the data released on Friday, this is a logical adjustment to expectations.
Fed Chairman Jerome Powell this week confirmed that labor market shielding was one of the reasons why the central bank of the United States began easing monetary policy in September as part of a larger-than-expected approach in the context of appropriate action. The data, which was published on Friday, is unequivocally positive for the US financial regulator. Officials of the central bank of the United States are aiming to prevent further cooling in the job market.
Laura Rosner-Warburton, a senior economist at MacroPolicy Perspectives, said that the Fed has a better chance of getting this right and not being behind the curve given the report published by the Bureau of Labor Statistics. The expert noted that the mentioned figures reduce the likelihood that the US financial regulator will decide on another lowering of the cost of borrowing by half a point.
It’s worth noting that the data released on Friday also matters in a political context. The corresponding figures can be described as good news for US Vice President Kamala Harris, who heads into the final weeks of the presidential election race. During this period, the main focus is on how voters assess the state of affairs in the space of the economic system. It’s worth noting that currently, residents of the United States are showing an increase in concern about job prospects. They also continue to face the high cost of living. It is worth noting separately that the economic situation has a political context that is recognized by the public consciousness.
Officials of the central bank of the United States are paying close attention to the growth of wages. Based on the relevant data, they form expectations for the dynamic of consumer spending. It is worth noting that mentioned spending is the main engine of the economy.
In September, wage growth for production and nonsupervisory employees cooled to 3.9% in the United States.
The jobs report for October, which will be published on November 1, will reflect the walkout of 33,000 factory workers of Boeing Co. The strike of dockers in the United States is likely to have no impact on the payroll figures for the month.
Another wrinkle is Hurricane Helene, which has caused deaths and destruction in the southeastern United States. In some parts of the relevant region, problems are currently being observed in the process of reopening roads and reconnecting power. This state of affairs indicates that businesses in the southeastern United States will need time to fully recover.
It is worth noting that against the background of positive data on the situation in the US labor market, the probability has increased that a soft landing scenario will be implemented in the space of the country’s economic system. At the same time, it is too early to make statements according to which the decision of the central bank of the United States to cut interest rates by 50 basis points in September caused a firm stabilization in the mentioned market. As for the next decision of the US financial regulator in the context of the subsequent easing of monetary policy, in this case, the most likely is a lowering of the cost of borrowing by 25 basis points during the November meeting.
The jobs report for September also testified that the so-called underemployment rate in the United States dropped to 7.7%. It is worth noting that this indicator showed the first decrease in almost a year. The underemployment rate takes into account those who work part-time for economic reasons and discouraged workers.
The participation rate in the United States in September was fixed at 62.7%. It is worth noting that this indicator, which reflects the share of the population working or looking for work, has not shown changes for three months in a row. The rate for workers aged 25 to 54 years in September in the United States showed a decrease, amounting to 83.8%. This category is also known as prime-age workers.
It is worth noting that layoffs have become more frequent in other countries of the world recently. For example, Samsung Electronics Co. is laying off workers in Southeast Asia and Oceania. The relevant decision is part of the process of implementing the company’s plan aimed at reducing the number of employees worldwide. The announced layoffs, as it became known this week, may affect about 10% of Samsung’s staff in the mentioned regions. The relevant information was published by the media with reference to an insider who used the right of anonymity since the issue of reducing the workforce is currently being discussed only in a confidential mode.
Currently, Samsung has about 147,000 staff overseas. It is worth noting that in the domestic market, in South Korea, the company does not plan layoffs.
Volkswagen AG is both trimming positions in China. Also, this company is currently considering the possibility of closing its factories in Germany, its home market.
Chris Rupkey, chief economist at FwdBonds LLC, commenting on the data released in the United States on Friday, said, a truly monster jobs number today. The expert also noted that economic growth in the US is still on course. Moreover, Chris Rupkey said that the September jobs report indicates favorable prospects for the United States economic system in the coming months. According to the expert, this system could end the year on a high note after weathering the growth and employment markets scare a couple of months ago.
Josh Hirt, senior US economist at Vanguard, said that the job growth in September should significantly reduce the need for urgency from the central bank of the United States. According to the expert, the Fed will continue to adhere to a relatively deliberate plan for lowering the cost of borrowing.
Brian Bethune, economist, and professor at Boston College, says that the decision to ease monetary policy taken by US central bank officials in September was a positive factor for businesses, which refrained from hiring employees amid a lack of understanding of the vector of the dynamic of interest rates, but now sees relief on the horizon.
