- A delayed September jobs report was released on Thursday.
- While job growth easily outperformed expectations, unemployment hit a four-year high
- New data may help dissuade the Fed from another interest rate cut next month.
A nearly seven-week-long U.S. jobs reporting blackout under the federal government shutdown came to an end Thursday with the Labor Department’s release of September employment sector data.
And the numbers, albeit a bit dusty, reflect cause for both optimism and concern when it comes to the direction of the U.S. labor market.
While Dow Jones analysts and other economists were forecasting a modest 50,000 new positions for the month, the Bureau of Labor Statistics’ Employment Situation Summary finds U.S. employers added 119,000 new, non-farm payroll positions in September. The agency also made downward revisions to July and August job figures, shaving 33,000 off of previous reporting and dragging August’s metric into negative territory at minus 4,000 jobs.
The national unemployment rate ticked up to 4.4% in September, matching the highest rate since October 2021. According to the most recent data from the state’s Department of Workforce Services, Utah’s unemployment rate stood at 3.3% in August.
“September’s jobs report shows the labor market still had resilience before the shutdown, beating payroll expectations, but the picture remains muddy with August jobs revised to a job loss and the unemployment rate increasing,” Daniel Zhao, chief economist at jobs site Glassdoor, told CNBC. “These numbers are a snapshot from two months ago and they don’t reflect where we stand now in November.”
Sectors with the biggest September job gains include health care, 43,000, food services/drinking establishments, 37,000 and social assistance employment, up 14,000 positions.
Transportation and warehousing led categories that experienced the biggest job losses in September with 25,000 cuts, while warehouse/storage employment was down by 11,000 and courier/messenger businesses lost a combined 7,000 jobs.
Will jobs report impact Fed’s direction?
The U.S. jobs market has been in decline for much of this year and that dynamic, alongside ongoing inflationary pressures, is challenging both policymakers and beleaguered consumers.
The bureau announced its plans for a simultaneous release of October and November employment reports on Dec. 16, so Thursday’s jobs report will be the last federal data the Fed will see ahead of its final policy meeting of the year on Dec. 9-10.
The Fed has made reductions to its benchmark interest rate at each of its last two meetings but most economists are predicting the monetary body will hold off on any additional cuts until the new year. The Fed’s overnight lending rate is in the 3.75% to 4% range.
At the conclusion of the Fed’s last meeting in October, Chairman Jerome Powell said there was “no risk free path forward” when it came to policy decisions.
That’s thanks to current economic conditions in which both sides of the Fed’s dual mandate of maximum employment and price stability are under fire, with inflation on the rise alongside a softening employment market.
Generally speaking, rate reductions help spur economic activity by reducing the cost of debt which can promote business activities like investment and hiring. Rate hikes, which increase the cost of consumer and commercial debt, quell spending and, theoretically, help slow down inflationary price increases.
In comments made at a press conference after the October meeting, Powell also noted that another cut in December was not a given.
“In the committee’s discussions at this meeting, there were strongly differing views about how to proceed in December,” Powell said. “A further reduction in the policy rate at the December meeting is not a foregone conclusion. Far from it.”