The U.S. labor market demonstrated unexpected resilience as September's job growth significantly exceeded forecasts, alleviating concerns about potential market deterioration. According to the U.S. Bureau of Labor Statistics, nonfarm payrolls increased by 254,000, far surpassing the anticipated 150,000. The revised figures for August showed an increase to 159,000, up from 142,000, and July's numbers were also revised upward by 55,000 to 144,000, marking an upward revision of 72,000 jobs across these months.
September saw a decrease of 7,000 jobs in the manufacturing sector, slightly less than the anticipated 8,000 decline. Private sector jobs rose by 223,000, beating the expected increase of 125,000, up from August's 118,000. The unemployment rate fell to 4.1%, below the expected 4.2%, as was also recorded in August.
Average hourly earnings for September grew by 4% year-over-year, exceeding the forecast of 3.8%, consistent with August's increase. On a monthly basis, wages rose by 0.4%, compared to the expected 0.3% growth, aligning with August figures. The average workweek duration was slightly lower at 34.2 hours, against the expected 34.3 hours, down from August's 34.3 hours.
Previously, various indicators, including a rising unemployment rate in earlier reports and a weak ISM manufacturing employment index, had signaled a cooling labor market, making labor data a focal point for policymakers and investors evaluating the potential for a soft landing of the U.S. economy amidst inflation concerns.
In response to fears of a deteriorating labor market, the Federal Reserve implemented a significant 50 basis point rate cut in September. Fed Chair Jerome Powell noted the labor market's robustness but acknowledged its cooling over the past year. He also indicated that further labor market cooling is not necessary to achieve the Fed's 2% inflation target.
Following the release of September's robust nonfarm employment data, traders reduced their expectations for a 50 basis point rate cut in November, with projections for the next four Fed meetings totaling less than 100 basis points.
The positive employment report led to a rise in U.S. stock futures, with the Nasdaq 100 futures climbing 1%. Concurrently, the dollar index surged by over 60 points, Treasury yields increased, and spot gold prices fell.
