Boon for economy as 336,000 jobs added last month but ‘concern’ over interest rate hikes
The economy is experiencing surprising job growth but experts are cautious over what this means for interest rates.
Experts are warning that further interest rate rises could be coming following today’s US job figures.
US payroll employment increased by 336,000 in September, surpassing previous expectations for the country's economy.
However, growth in the job market could signal further interest rate hikes from the Federal Reserve.
Over the past year, the central bank has hiked in an attempt to ease the pressures on the economy caused by inflation.
Last month, the Fed paused its series of rate increases but today’s job figures could mean more rises are on the horizon.
Non-farm payrolls (NFPs) jumped by around 336,000 in September which is the highest monthly increase since January and is the third consecutive month where the NFP figure has exceeded that of the previous month.
The three-month average NFP figure also rose to 240,000 today from 163,000 the month before.
Furthermore, the gains made in August were revised up to 227,000 which was primarily driven by a hike in government employment.
Some experts cite that this data indicates the previous downward trend in job creation has collapsed for the time being.
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Notably, September’s data revealed an uptake in private payrolls at 263,000 which is considerably above the consensus of 160,000.
The hospitality and leisure sector was a key part of this rise, adding 96,000 jobs last month which is significantly higher than the 12-month average.
Unemployment remained unchanged with the rate remaining at 3.8 percent with there being no noticeable change in the long-term unemployed or labor force participation rate.
Average hourly earnings increased by 0.2 percent for September which experts believe is a “modest deceleration” to the yearly rate of 4.2 percent compared to August’s 4.3 percent.
Nathaniel Casey, an investment strategist at Evelyn Partners, is warning that the recent developments in the job market could mean further intervention from the Federal Reserve is on its way.
He explained: “At the Jackson Hole Symposium, Fed Chair Jay Powell said, ‘evidence that the tightness in the labour market is no longer easing could also call for a monetary policy response.’
“This stronger-than-expected labor market report will therefore be of concern to the Fed and likely increases the risk of an additional rate hike in either the November or December FOMC meeting.
“However, with inflation coming under control, wage growth starting to ease and the rise in yields prompting tighter financial conditions, this could be enough to allow the fed to continue to hold rates steady.”
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