WASHINGTON, United States – US employers picked up their hiring pace unexpectedly in September while unemployment held steady, government data showed on Friday, adding pressure on policymakers seeking to cool the economy.
(Photo from AFP)
The US economy added 336,000 jobs last month in the highest surge since January, while the jobless rate was unchanged at 3.8 percent, said the Labor Department.
This adds to signals that the American job market remains robust despite efforts by the central bank to cool the world’s biggest economy and lower inflation sustainably.
When the Federal Reserve lifts interest rates and borrowing costs rise, this can dampen hiring associated with business expansion and the jobless rate is generally expected to rise.
But for now, the pace of hiring hovers above pre-pandemic levels and unemployment is still around a historically low level, meaning that Fed officials could consider further policy action.
Analysts, however, have warned that the job market could weaken going forward, as it takes time for existing policy changes to ripple through the economy.
In September, sectors that saw job gains included leisure and hospitality, government as well as health care, said the Labor Department.
A factor contributing to the latest increase was the education sector, with analysts at Pantheon Macroeconomics saying in a recent report that they expected a bounce in state and local education after surprisingly weak summer hiring.
– ‘Slowing wage pressures’ –
Apart from the overall acceleration in employment, hiring figures for August and July were also revised upwards by 119,000 combined, the latest Labor Department report added.
Average hourly earnings rose 0.2 percent, the same rate as in August.
The pick-up in employment is expected to support incomes, and this will likely be of concern to Fed officials as it could feed into consumer demand and inflation.
Apart from the steady monthly pay gains figure, economist Rubeela Farooqi of High Frequency Economics noted the annual change in earnings was a 4.2 percent increase — the smallest gain since June 2021.
“A slowing in wage pressures will be welcome news,” she said.
Currently, her expectation remains that there will not be further interest rate hikes this year.
But if the labor market continues to strengthen, she cautioned, this would keep the Fed open to raising rates further in 2023.
The latest government jobs report comes after figures by payrolls firm ADP released earlier this week showed hiring in the private sector slowed sharply in September.