US employers added a surprisingly strong 336,000 jobs in September in a sign of economic resilience
By Christopher Rugaber, The Associated Press on October 6, 2023.
WASHINGTON (AP) – The nation’s employers added 336,000 jobs in September, an unexpectedly robust gain that suggests that many companies remain confident enough to keep hiring despite high interest rates and a hazy outlook for the economy. Friday’s report from the Labor Department showed that hiring last month jumped from a 227,000 increase in August, which was revised sharply higher. July’s hiring was also healthier than initially estimated. The economy has now added a healthy average of 266,000 jobs a month in the past three months. The unemployment rate was unchanged at 3.8%. The job market has defied an array of threats this year, notably high inflation and the rapid series of Fed interest rate hikes that were intended to conquer it. Though the Fed’s hikes have made loans much costlier, steady job growth has helped fuel consumer spending and kept the economy growing. The September hiring report comes at a time when the Fed is scrutinizing every piece of incoming economic data to decide whether it needs to raise its benchmark rate once more this year or instead just leave it elevated well into 2024. Job growth has remained resilient for most of the past 2 1/2 years even after high inflation flared and the Fed jacked up interest rates at the fastest pace in four decades. Yet additional threats to the economy have emerged in recent weeks, including much higher long-term interest rates, rising energy prices, the resumption of student loan payments, widening labor strikes and the ongoing threat of a government shutdown. The job market has been so strong for so long that a slowdown, as long as it remains gradual, would still keep it at healthy levels. The number of Americans seeking unemployment benefits, which tends to track the pace of layoffs, has remained persistently low. Many companies are reluctant to shed workers after having found it difficult to staff up again after the 2020 pandemic recession ended with a quick and robust recovery. And surveys by the Institute for Supply Management, a trade group of purchasing managers, found that both manufacturing and services companies kept adding jobs last month. Among banks, restaurants, retailers and other service sector companies, hiring accelerated in September compared with August, according to the ISM. The Fed’s benchmark rate stands at a 22-year high of roughly 5.4% after 11 hikes beginning in March 2022. The central bank’s rate increases have led to much higher borrowing costs for consumers and businesses across the economy. On the one hand, Fed officials, including Chair Jerome Powell, have stressed that inflation remains too far above their 2% target and that another rate hike might be needed to slow it to that level. At the same time, several Fed policymakers have underscored that they want to be careful not to raise borrowing rates so much as to trigger a deep recession. After a period in the spring when traders seemed to expect the Fed to reverse course and cut interest rates soon, the financial markets now recognize that the central bank will keep its key rate elevated well into 2024. That’s one reason why the yield on the 10-year Treasury note has surged since July, reaching a 16-year high this week before slipping to 4.7% Thursday. The 10-year yield is a benchmark rate for other borrowing costs, including mortgages, auto loans and business borrowing. The average rate on a fixed 30-year mortgage jumped to nearly 7.5% this week, the highest level in 23 years. The higher yield has, in turn, punished stocks: The S&P 500 stock index has tumbled 7.2% since late July. Goldman Sachs has estimated that the economy’s growth in the current October-December quarter could slow to an annual rate as low as a 0.7%, sharply below a roughly 3.5% pace in the July-September quarter. 15-14
