US economy surpasses market expectations, adding 336k new jobs in September.
The U.S. Economy Adds 336,000 New Jobs in September, Reversing Summer Slowdown
The U.S. economy experienced a significant boost in September, with the creation of 336,000 new jobs, according to the latest data from the Bureau of Labor Statistics (BLS). This marks a reversal of the cooling trend observed during the summer months. The job growth also surpassed expectations, exceeding the consensus estimate of 170,000 and the upwardly revised figure of 227,000 in August.
In addition to the positive job numbers, the BLS also adjusted payrolls for July and August, increasing them by 79,000 and 40,000, respectively. However, the unemployment rate remained unchanged at 3.8 percent, slightly higher than the market forecast of 3.7 percent. The labor force participation rate also remained flat at 62.8 percent.
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“The good news for the economy from this jobs report will be seen by many as constituting bad news for markets and monetary policy,” said top economist Mohamed El-Erian. “Given how often the Federal Reserve has stressed that it is ‘data dependent,’ this will put a hike back on the table for markets on November 1.”
Some monetary policymakers argue that the central bank may need to raise interest rates or keep them higher for a longer period to achieve the institution’s 2 percent target inflation goal. Fed Gov. Michelle Bowman expressed her belief that it would be appropriate for the committee to raise rates further and maintain them at a restrictive level to return inflation to the desired goal.
The job gains in September were primarily driven by three sectors: leisure and hospitality (96,000), government (73,000), and health care (41,000). Social assistance added 25,000 positions, while manufacturing payrolls grew by 17,000. However, employment in other sectors, such as transportation and warehousing, information, mining, and construction, remained relatively unchanged.
While the headline figure of job growth is positive, some economists argue that the underlying data suggests stagnation. Many of the new jobs were concentrated in sectors like leisure and hospitality and the public sector, indicating slow growth in the rest of the economy.
Furthermore, the annualized average hourly earnings slipped slightly to 4.2 percent from 4.3 percent, according to the BLS report. On a month-over-month basis, average hourly earnings remained unchanged.
Despite the positive job numbers, public sentiment regarding the economy remains mixed. Various polls indicate that a significant portion of the public feels discontented with the current economic climate. President Joe Biden, however, sees the September jobs report as evidence that his economic policies, known as “Bidenomics,” are working.
Public Discontent and Concerns
- The latest ABC News-Washington Post survey found that 44 percent of Americans believe they are worse off financially.
- A recent Wall Street Journal poll revealed that roughly 3 in 5 respondents disapprove of President Biden’s handling of the economy.
- An Associated Press-NORC Center for Public Affairs Research survey showed that only 36 percent of respondents approved of President Biden’s economic management.
- A new Economist-YouGov study discovered that 68 percent of respondents believe the country is on the wrong track.
The Biden administration maintains that the economy is performing better than expected and that it will take time for the public to feel the effects of their legislative accomplishments. Treasury Secretary Janet Yellen emphasized the positive impact of the administration’s investments in America.
However, despite these claims, registered voters struggling in the current economic climate are leaning towards the Republican Party. An NBC News poll revealed that the GOP holds a 21-point advantage in managing the economy, and a significant portion of respondents believe that neither party adequately represents the middle class.
Impact on Fed Policy
The U.S. financial markets reacted negatively to the September jobs report, with benchmark indexes experiencing a significant decline in pre-market trading.
The U.S. Dollar Index (DXY) rose by 0.4 percent, indicating a strengthening of the greenback against other currencies. Treasury yields also saw a significant increase, with the benchmark 10-year yield surging by 12 basis points to nearly 4.84 percent.
U.S. bonds initially experienced a boost following the better-than-expected labor data, suggesting that the Federal Reserve may tighten monetary policy and raise interest rates. The robust September jobs report allowed yields to reach their highest levels since 2007.
According to the Federal Reserve’s latest projections, officials anticipate a median policy rate of 5.6 percent, indicating the possibility of another rate increase at the November or December policy meetings. The projections also revised the unemployment rate downward for 2023, signaling a positive outlook for the labor market.
A Week of Labor Data
Prior to the September jobs report, the U.S. labor market appeared to be performing better than expected.
The number of job openings increased in August, reaching 9.61 million, surpassing expectations. Layoffs by U.S.-based employers were significantly lower than forecasted, while plans to add new positions increased. However, the ADP’s monthly National Employment Report presented a different picture, with the private sector creating fewer jobs than anticipated.
Despite the mixed labor data, the overall sentiment is that the U.S. economy is on a positive trajectory. The September jobs report provides hope for continued growth, although concerns about public sentiment and the impact on Fed policy remain.
How is the party effectively addressing the ongoing supply chain disruptions and labor shortages impacting the U.S. economy?
Her party is effectively addressing economic concerns.
Looking ahead, the U.S. economy faces several challenges that may impact its growth trajectory. One key concern is the ongoing supply chain disruptions and labor shortages, which have constrained production and led to higher inflation. The recent surge in energy prices due to supply disruptions and increased demand further exacerbates inflationary pressures. These factors may pose risks to the overall economic recovery and could influence the Federal Reserve’s decision-making process.
Another factor to consider is the possibility of policy changes that could impact the business environment. President Biden’s proposed tax increases on corporations and wealthy individuals have raised concerns among some economists and business leaders. Higher taxes may restrict investment and hinder economic growth in the long run.
Additionally, the global economic outlook remains uncertain. The ongoing COVID-19 pandemic, along with geopolitical tensions and trade disputes, could impact global trade and economic activity. As the United States relies heavily on international trade, any disruptions or slowdowns in the global economy could have spill-over effects on the domestic economy.
Overall, the September job growth numbers present a positive picture of the U.S. economy, demonstrating resilience and a rebound from the summer slowdown. However, it is important to delve deeper into the data to understand the nuances and challenges that lie ahead. As the country navigates through various economic headwinds, policymakers and industry leaders must make informed decisions to foster sustainable and inclusive growth.
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