US Job Growth September 2024 Adds Over 250,000 Jobs, Reducing Fears Of An Economic Slowdown

Job growth in the US is proving stronger than the Federal Reserve had thought, with employers adding a surprisingly strong 254,000 jobs in September, which eases concerns that the labour market was weakening and suggests that the pace of hiring is still solid enough to support a growing economy.

Last month’s advance was much greater than economists had predicted, and it came in far above the 159,000 jobs added in August. And after climbing for much of 2024, the unemployment rate dipped for a second consecutive month, to 4.1% in September from 4.2% in August, the Labor Department said Friday.

The latest figures show that quite a few companies remain confident enough to fill jobs even as high interest rates continue exerting the pressure as described.

A welcome sign also came from the Labor Department, which revised its estimate of job growth in July and August by a combined 72,000. Including those revisions, September’s job gain – forecasters had predicted only about 140,000 – means that job growth has averaged a solid 186,000 over the past three months. In August, the three-month average was only 140,000.

“There’s still more momentum than we had given it credit for,” Stephen Stanley, chief economist at the banking company Santander, said of the job market. “I would call it solid — certainly not as explosive as what we were seeing last year or the year before when we were catching up from the pandemic. But the pace of job growth overall is very healthy.” Related Stories

The September job gains were rather broad-based, a good trend if it continues. Restaurants and bars added 69,000 jobs. Healthcare companies gained 45,000, government agencies 31,000, social assistance employers 27,000 and construction companies 25,000. A category that includes professional and business services added 17,000 after having lost jobs for three straight months.

Average hourly gains were also good. They rose more than the forecast 0.4% in August, but less than a 0.5% gain the previous month. Adjustment for inflation resulted in an increase of 4% in hourly wages for September, a tenth better than the 3.9% year-over-year advance in August.

The economy’s progress in taming inflation led the Federal Reserve last month to cut its benchmark interest rate by a sizable half-point, its first rate cut in more than four years, and said further cuts were likely in the coming months. The Fed said it wanted to ease the cost of borrowing to help bolster the job market. Given Friday’s stronger-than-expected jobs report, the Fed is probably to cut its key rate now by quarter-point increments more typical of the past.

“The September jobs report shows a nice bump in labour demand at the beginning of the fall, ″ said Bill Adams, chief economist at Comerica Bank. “The U.S. economy is growing solidly in 2024 even as inflation slows to near the Fed’s target. ″

An economy so resilient is a relief. Economists had long expected that the Fed’s bold campaign to subdue inflation – it hiked interest rates 11 times over 2022 and 2023 – would push the economy into recession. It didn’t. The economy kept growing even in the face of ever-higher borrowing costs for consumers and businesses.

Most economists believe now that the Fed has finally achieved the once-unlike prospect of a “soft landing,” wherein high interest rates help vanquish inflation without triggering a recession.

Frustration with the high prices is widespread amid the election runoff in Georgia that will settle whether Republican gains in the South have finally given that party a majority in the Senate. Moreover, weighing on voters as the Nov. 5 presidential election approaches is the economy. Many Americans remain unimpressed by the job market’s durability and are still aggravated by high prices that remain on average 19% above where they were in February 2021. That was when inflation began surging as the economy rebounded with unexpected speed and strength from the pandemic recession, which triggered acute shortages of goods and labour.

The discontent in the public mind about inflation and the economy under President Joe Biden has also been a weight around the neck of Vice President Kamala Harris in her campaign for the White House against former President Donald Trump.

The government is likely to muddy the jobs report for October, which it will issue four days before Election Day, with the effects of Hurricane Helene and a strike by Boeing machinists.

However, most indicators look solid across the economy as a whole. The world’s largest economy-the U.S. economy grew at a brisk 3% annual pace from April through June, mainly driven by consumer spending and business investment. A forecasting tool from the Federal Reserve Bank of Atlanta indicates growth will slow somewhat but still be healthy at 2.5% a year in the just-ended July-September quarter.

While most American companies remain hesitant to hire new people, some report they’re facing difficulties in filling positions.

At Overthrow Hospitality, which operates 11 vegan restaurants in New York, Drew Brady, the chief operating officer, has stopped requiring job applicants to have restaurant experience. Brady is seeking applicants who have a passion for food and a sense of the theatrical. His hourly staff now includes actors, students and foodies. It’s difficult, he said, to find experienced restaurant managers. His latest crop includes a former school principal and a server who had no management experience. “I can teach you how to manage a restaurant, but I can’t teach you how to care,” said Brady, whose restaurants employ between 100 and 150 workers. The new approach, he said, appears to be succeeding, and he plans to maintain it even if more experienced applicants become available. “The circumstances pushed us here,” Brady said. “But because of them, the light bulb went off.

It’s a lesson in adaptation.” Given Friday’s robust hiring report, economists say the Fed will almost certainly cut its benchmark rate in November by a modest quarter-point, after its larger-than-usual half-point reduction in September. The healthier the job market appears, the less aggressive the Fed would need to be in easing borrowing costs.

The policymakers would want to avoid easing credit so fast as to reignite inflation pressures. “The bottom does not appear to be falling out of the labour market,” said Jason Pride, chief of investment strategy at Glenmede. After Friday’s jobs report was released, Wall Street traders priced in a sharply higher likelihood of a quarter-point, rather than a half-point, rate cut at the Fed’s November meeting: 93%, up from 68% on Thursday.

At Otis AI in New York, founder Miguel Guerrero said he’s optimistic that Fed rate cuts, which should lead to lower borrowing costs across the economy, will make it easier for startups like his to obtain financing to expand and hire. “There’s a lot more optimism in the startup ecosystem for getting more funding,’’ he said. Otis AI helps companies advertise online. After a round of tech industry layoffs last year, Guerrero said, “It’s easy for companies to find top-level talent right now.” Yet the availability of experienced tech workers can make it difficult for younger applicants to find work. For a startup, Guerrero said, “it doesn’t make sense to put an entry-level person in there. You’re not going to have time to bring them up to speed.’’