Growth surges past expectations

US job growth surges past expectations, showing economy’s strength

The surprisingly solid numbers put Fed Chair Jerome Powell on course to reduce interest rates by a modest quarter of a point when the central bank holds its next meeting.

By Katy O'Donnell and Sam Sutton

US employers added 254,000 jobs in September, the Labor Department reported Friday — more than 100,000 above forecasts, signaling that the economy is still powering ahead despite fears of a slowdown.

The report — released just a month before Election Day — showed that the unemployment rate dropped to 4.1 percent, while hourly wages increased at an annual rate of 4 percent. While it far exceeded expectations, it’s in keeping with a soft landing that everyone — especially Vice President Kamala Harris — had hoped the Federal Reserve could achieve after it undertook one of the most aggressive series of rate hikes in its history in 2022 and 2023.

The surprisingly solid numbers put Fed Chair Jerome Powell on course to reduce interest rates by a modest quarter of a point when the central bank holds its next meeting on Nov. 6-7. The Fed slashed rates by a half-point at its last meeting out of concern for a weakening labor market.

The Fed can now “breathe a sigh of relief,” economist Justin Wolfers posted on X. “It came in for strong criticism for being ‘behind the curve’ when it looked like the economy might need a bit more help. Today’s news plus the revisions suggest that the economy may not have needed that much help.”

Economists had predicted that non-farm payrolls grew by a solid, but unspectacular, 150,000 jobs in September with the unemployment rate projected to hold steady at 4.2 percent.

“Overall, the economy is in solid shape,” Powell said during an appearance at the National Association for Business Economics conference in Nashville earlier this week. He later added that the Fed is not “in a hurry to cut rates quickly.”

To be sure, Friday’s jobs report provides a snapshot of how the labor market had fared before any shocks related to a strike by Boeing workers, the brief shutdown of East Coast and Gulf Coast ports by the International Longshoremen’s Association and the devastation of Hurricane Helene.

Indeed, the labor market data released earlier this week has been mixed. The weekly initial unemployment claims data reported on Thursday morning was within normal ranges. The Labor Department on Tuesday reported that the number of available jobs rose in August while layoffs and discharges fell. Still, fewer workers are quitting their jobs — which usually means that they’re less optimistic about finding new work — and the Institute for Supply Management’s widely cited employment indexes for the services and manufacturing sectors both contracted.

The Fed cut rates by half a percentage point, or 50 basis points, last month to preserve the labor market. So far, rising unemployment has largely been linked to an expansion of the labor pool, mostly due to immigration.