The U.S economy added 336,000 jobs in September – better than expected – while the unemployment rate was flat at 3.8%, according to the U.S. Bureau of Labor Statistics.
Job gains occurred in leisure and hospitality; government; health care; professional, scientific, and technical services; and social assistance.
The number of unemployed persons was essentially flat at 6.4 million.
Both the labor force participation rate, at 62.8%, and the employment-population ratio, at 60.4%, were unchanged over the month.
Leisure and hospitality added 96,000 jobs in September, above the average monthly gain of 61,000 over the prior 12 months.
Employment in food services and drinking places – which includes many part-time jobs – increased by 61,000 positions over the month and has returned to its pre-pandemic February 2020 level.
Accommodation employment continued to trend up but remains below its February 2020 level by 217,000 jobs, or 10.3%.
The government sector added 73,000 jobs – well above the average monthly gain of 47,000 over the prior 12 months – while health care added 41,000 jobs, down compared with the average monthly gain of 53,000.
Wages continued to rise, albeit more slowly: The average hourly wage for all employees on private non-farm payrolls increased by 7 cents, or 0.2%, to $33.88.
Over the past 12 months, average hourly earnings have increased by 4.2%.
In September, average hourly earnings of private-sector production and nonsupervisory employees increased by 6 cents, or 0.2%, to $29.06.
Odeta Kushi, deputy chief economist for First American, notes that the surge in jobs gives the “Fed more to ponder as it considers another rate hike.”
“This month’s strong job growth in conjunction with the upward revisions for July and August casts doubt on the narrative that the labor market is slowing,” Kushi says in a statement. “Job gains are down from 2021 levels, but have remained fairly steady this year.
“In contrast to job growth, wage growth continued to cool this month,” Kushi says. “Wage growth was 4.2 percent in September, below consensus expectations of 4.3 percent and the slowest pace since June 2021, with month-over-month growth just 0.2 percent. The Fed is monitoring wage growth for signs of price pressures as they consider whether to raise rates again this year.
“Labor force participation remained flat this month, but still at a high level,” she adds. “Once you dig below the headline jump in payroll gains, there are signs that employers’ demand for labor has cooled this year, while labor supply has picked up. Wage growth is moderating and labor participation remains high, which is what the Fed wants to see.”
In the construction sector, non-residential building jobs declined modestly in September, falling 0.02%, while residential building jobs increased by 0.7%. Both were up on an annual basis.
“Within the construction industry, employment growth was highest for residential building and residential specialty trade contractors,” Kushi says. “Many have been surprised at the strength of the construction labor market in the face of higher mortgage rates. But builders have benefitted from the lack of re-sale inventory and from their ability to use incentives such as mortgage rate buydowns to entice buyers. Builders have a huge competitive advantage over the re-sale market in this way. And you need more hammers at work to build more homes.”
Photo: Marten Bjork