News That Matters

Employers Added 263,000 Jobs in September, Slightly Less Than Expectations | Economy

U.S. employers added 263,000 jobs in September, a hair below consensus forecasts, as the unemployment rate ticked back down, the Labor Department reported on Friday.

The number is a drop from August’s 315,000 jobs. The unemployment rate, meanwhile, fell back to 3.5%, matching its historic, pre-pandemic low.

The report indicates the labor market remains strong even in the face of an aggressive campaign by the Federal Reserve to stem inflation by raising interest rates. Other economic data out this week, including a report Tuesday that there are still 10.1 million jobs available and private payroll firm ADP’s monthly survey showing 208,000 new jobs created, reflect a similar picture of the employment situation.

The Fed is hoping the labor market cools down and with it wage inflation. Friday’s report showed a year-over-year gain of 5%, a slight dip from the 5.2% in August.

“A labor market characterized by high demand, but limited supply means upward pressure on wages as employers compete to attract and retain employees, putting upward pressure on inflation,” said Odeta Kushi, deputy chief economist at title insurer First American, ahead of the jobs report’s release. “The Federal Reserve is watching wage growth for signs of a cooling economy as it works to tame high inflation.”

The wage growth number still leaves many workers behind in the race to keep up with rising prices. As a result, consumers are turning to credit cards and savings to make ends meet.

A recent survey from credit firm TransUnion found that consumers are back using their cards after many paid down their balances with money received from three rounds of federal stimulus spending. The average cardholder now carries an average balance of $5,270, “up significantly from 2021, but still below pre-pandemic levels,” TransUnion says.

But with interest rates on the rise and a possible weakening of the job market, Americans could be in for a squeeze on their living costs, says Paul Siegfried, senior vice president card and banking business leader at TransUnion.

“The folks that are most vulnerable in a high inflation, high interest rate environment are those on a fixed income, or those of low income,” he says.

There has been some improvement in the inflation scenario, with gasoline prices down from their midsummer peak and costs of commodities like lumber far below their pandemic levels. But the most recent measures of inflation, such as the August consumer price index, still show it running at twice the rate of the Fed’s 2% annual goal.

There are some signs that employers have shifted their hiring patterns and may be expecting a less tight market for new talent, but experts say that the market would still be considered tight by historical standards.

“Hiring has softened a little bit,” says Scott Hamilton, global managing director of Gallagher’s human resources and compensation consulting practice, “but we’re still seeing hiring for critical jobs. There’s fewer candidates for these openings and so it’s still tight.”

One area where companies are not cutting back, Hamilton adds, is in providing benefits and a flexible workplace, offerings that became critical during the coronavirus pandemic.

“I think we’re seeing more of the future of work aligning with the future of living,” he says.

Just 8.1% of employed U.S. adults surveyed in September said they expect to lose employment income in the next four weeks, down from 12.5% in August – an indication recession risks are not yet worrying the average worker,” the company said in a memo on Thursday.

“Layoffs in August were up less than 1% from the prior year,” said Scott Armstrong, president of recruiting at Safeguard Global, a workforce management company. “Layoffs, particularly in start-ups, occur in all labor markets but are getting much more attention than they have in the recent past. While certain sectors, such as the mortgage industry, have been hit hard, this has not yet extended into all industries.”

Source link