The U.S. economy added 254,000 jobs in September – far better than was forecast – and the unemployment rate remained flat at 4.1% compared with August, according to the Bureau of Labor Statistics.
Employment continued to trend up in food services and drinking places, health care, government, social assistance, and construction.
The number of unemployed people stood at 6.8 million – up from 6.3 million in September 2023, when employment was at 3.8%.
In September, the labor force participation rate was 62.7% for the third consecutive month.
The employment-population ratio was also little changed at 60.2%.
Both measures have changed little over the past year.
Wages continued to increase, with the average hourly wage for private nonfarm payrolls increasing by 13 cents, or 0.4%, to $35.36.
Over the past 12 months, average hourly earnings have increased by 4.0%.
The average hourly wage of private-sector production and nonsupervisory employees increased by 8 cents, or 0.3%, to $30.33.
“The September jobs report crushed consensus expectations, likely undercutting mounting concerns of weakness in the labor market and lowering the probability of a 50-basis point cut in November,” says Odeta Kushi, deputy chief economist for First American, in a statement. “The 10-year treasury yield is higher on this news, which may result in some upward pressure on mortgage rates.
“September marked a record 45 consecutive months of 100,000 or more jobs added,” Kushi says. “Not to mention, with revisions, employment in July and August combined is now 72,000 greater than previously reported. All that to say, a soft-landing scenario is still possible.”
So does the strong jobs report reduce the likelihood of an additional Fed rate cut in 2024? And how might it affect mortgage rates in the short term?
“A stronger-than-expected labor market report may put some upward pressure on mortgage rates, which could be discouraging for buyers, sellers, and builders,” Kushi says. “However, a resilient labor market is essential for both the housing market and the broader economy.
“The residential construction labor market continued to trend higher and remains resilient,” she adds. “The Job Openings and Labor Turnover Survey (JOLTS) from earlier this week showed a surprise increase in the number of job openings, driven in large part by new construction job openings. This could be a sign that the construction industry is beginning to retool in anticipation of lower construction financing costs, which could begin to offset some of the substantial increase in construction material prices that have occurred over the last four years.”
Lawrence Yun, chief economist for the National Association of Realtors (NAR), says the report shows that “There is no national economic recession on the horizon.”
“The net payroll job addition in September strengthened to 254,000 after adding much lighter job gains in the previous months,” Yun says in a statement. “The annual wage gains also accelerated to 4.0 percent after softening to 3.6 percent just two months earlier.
“More jobs mean more real estate demand, from retail spaces to apartment leases,” Yun says. “Home buying will also increase, provided the conditions are right, and more inventory choices and lower mortgage rates will help.
“Even with the solid job figures, the Federal Reserve will continue to cut its short-term interest rates but with more caution,” Yun adds. “Mortgage rates, however, which are not controlled by the Fed, look to rise modestly and temporarily. This just reinforces the notion that trying to market-time the best mortgage rates can backfire.”
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