U.S. employers added 263,000 jobs in September. This came in just below analyst expectations. The unemployment rate fell back to 3.5%. Year-over-year wage growth dropped to 5.0%.
263,000: U.S. employers added 263,000 jobs in September.
3.5%: The unemployment rate fell to 3.5%.
5%: Wages rose 5% over the past year.
The good news in September’s jobs report may seem surprising. The red-hot jobs market is cooling. As MarketWatch reports, the latest report marks the slowest job growth in 17 months as the Federal Reserve continues to raise rates and employers face continuing labor shortages. The Federal Reserve is hoping to slow the unsustainable pace of job growth to avert a potential recession. Wage growth also cooled slightly in September. This is a major focus for policy makers as higher wages can increase inflation.
The bad news in September’s report is that the cooling isn’t happening fast enough. While September’s report shows a slower pace of hiring compared to recent years, historically, the 263,000 jobs added demonstrate significant job growth. Labor force participation also dropped slightly and has yet to reach pre-pandemic levels. As the Wall Street Journal reports, this means the Federal Reserve is not meeting its inflation goals and will likely raise rates again in November.
The big question for economists will be whether the Federal Reserve is able to do enough to slow inflation in coming months to avert a recession. As the New York Times reports, the next rate decision is scheduled for Nov. 2, and officials are closely watching the jobs data. There are indications that employers are starting to slow the pace of hiring, as the number of open jobs fell by more than one million in August, and filings for unemployment benefits have slightly increased. However, economists say the economy needs to slow more quickly than the current pace.