The US labor market added 336,000 jobs in September – DOUBLE analyst forecasts – sending markets tumbling as investors fear more Fed rate hikes due to overheating economy
- The US labor market created 336,000 jobs in September – twice as many as forecast
- Markets fell as investors predicted the Fed will maintain high interest rates
The latest jobs report on Friday showed a sharp rise in employment, fueling the Fed’s struggle to curb inflation.
The U.S. economy added 336,000 jobs in September, nearly double economists’ expectations of 170,000 and the biggest increase since January.
Although the Fed recently halted rate hikes, it has suggested more rate hikes are in the offing, and Friday’s job gains made traders raise the odds of a hike before the end of the year.
Unemployment rates remained stable at 3.8 percent, the U.S. Bureau of Labor Statistics reported.
Construction workers are building a residential tower in Miami, Florida. The US labor market created 336,000 jobs in September
Markets reacted negatively to the report, with the S&P 500 and Nasdaq-100 down about 1 and 2 percent, respectively
The new jobs were secured in: leisure and hospitality, government, healthcare, professional, scientific and technical services; and social assistance.
The number of film and sound recording jobs fell by 5,000 and has fallen by 45,000 since May, as strikes continue in Hollywood.
Markets reacted negatively to the report, with the S&P 500 and Nasdaq-100 down about 1 and 2 percent, respectively.
Similarly, government bond yields rose, meaning mortgages and credit card rates associated with them will also rise.
The yield on ten-year government bonds rose by 0.17 percent to 4.87 percent, reaching the highest level since the early days of the financial crisis.
However, wage growth is slightly lower than expected. slowing to 0.2 percent month-on-month and 4.2 percent year-on-year – the lowest level since June 2021.
Nick Bunker, an economist at the Indeed Hiring Lab, says these numbers should temper concerns.
‘The continued slowdown in wage growth is the key trend in this report. “If job growth continues to be this strong without wages slowing, that would be a problem for the Federal Reserve,” he said.
‘The hectic days of recent years are behind us and the road to a more balanced market is getting wider.’
Echoing that sentiment, Paul Hickey of Bespoke Investment Group told Bloomberg that while the total number of 336,000 was high, other figures were not as extreme.
“Under the surface, the report was not as exciting as it seemed,” he told the newspaper.