In September, the U.S. labor market really picked up, adding an impressive 254,000 jobs—well above expectations and a clear signal of growing business confidence.
According to the Department of Labor, this figure is a significant jump from the 159,000 jobs added in August.
The job gains were widespread across various sectors, with the unemployment rate dropping for the second month in a row—from 4.2 percent to 4.1 percent.
Restaurants and bars were particularly active, contributing 69,000 new jobs, while healthcare grew by 45,000. Other sectors also saw increases: government agencies added 31,000, social assistance added 27,000, and construction added 25,000. After three months of losses, the professional and business services sector rebounded with 17,000 new jobs.
The Labor Department also adjusted earlier figures, adding a total of 72,000 jobs to the estimates for July and August.
Bill Adams, chief economist at Comerica Bank, noted, “The September jobs report shows a nice bump in labor demand as fall begins. The U.S. economy is performing well in 2024, even with inflation easing towards the Fed’s target.”
Wages are on the rise, too; there was a 0.4 percent increase in September, with an annual growth rate of 4 percent, up from 3.9 percent in August.
This strong job market has led to new optimism about the Federal Reserve’s ability to nurture economic growth while keeping inflation under control. Following this positive report, the Fed may consider smaller interest rate cuts ahead, likely shifting to a more typical quarter-point reduction in the near future.
Still, President Biden and Vice President Harris are facing criticism over inflation, which remains about 19 percent higher than it was in February 2021, leaving many voters skeptical about the economy as the November 5 presidential election approaches. Former President Trump is presenting himself as a pro-business, low-tax alternative.
The upcoming October jobs report, which will be released just days before the election, may reflect economic challenges stemming from Hurricane Helene and a Boeing Machinists’ strike.
Currently, layoffs and unemployment claims are at historic lows, as companies are hesitant to let workers go. Consequently, the rate of job quitting is at its lowest since August 2020, a time when COVID-19 was still impacting the economy.
As the recovery progresses, experts remain cautiously optimistic, with everything hinging on economic indicators that the Federal Reserve will monitor closely in the coming months.
Many economists believe the Fed may be close to achieving a “soft landing,” where high interest rates can tame inflation without triggering a recession. The Federal Reserve raised interest rates 11 times from 2022 to 2023.
Recently, Fed Chair Jerome Powell remarked that the country is nearing a breakthrough in the battle against inflation. “We need to recalibrate our interest rate policy given the progress on inflation,” he stated. “We’re not declaring ‘mission accomplished,’ but the progress has been encouraging.”
This article contains reporting from The Associated Press.