CNN
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\n US job growth surged in September, blowing past expectations <\/a>and providing solid reassurance for the ongoing stability of the labor market.\n <\/p>\n \n Employers added an estimated 254,000\u00a0jobs\u00a0in September, according to data released Friday by the Bureau of Labor Statistics. That\u2019s a much higher tally than August\u2019s monthly total<\/a> (which was upwardly revised to 159,000) and it smashed economists\u2019 expectations for a 140,000-job gain.\n <\/p>\n \n The\u00a0unemployment\u00a0rate dropped to 4.1% from 4.2%, the BLS report showed.\n <\/p>\n \n \u201cWe had a bounce-back now in September from what were relatively sluggish numbers in July and August,\u201d Brian Bethune, economist and professor at Boston College, told CNN. \u201cSo it looks like we\u2019re still on track. The economy is expanding and we have a very high probability of achieving a soft landing (of reining in high inflation without triggering a recession).\u201d\n <\/p>\n \n Robust service-sector hiring \u2014 particularly across the health care (+71,700) and leisure and hospitality (+78,000) industries \u2014 drove last month\u2019s job gains. Service industries accounted for 202,000 of the monthly gains.\n <\/p>\n \n Hiring was more muted across goods-producing industries. Although the construction sector added 25,000 jobs last month (a pace that exceeded pre-pandemic averages), the manufacturing sector, which employs close to 13 million people, downshifted very slightly and logged a loss of 7,000 jobs.\n <\/p>\n \n The\u00a0Federal Reserve, now keenly focused on protecting the labor market<\/a> as high\u00a0inflation\u00a0appears to have been tamed<\/a>, is closely scrutinizing\u00a0employment\u00a0data for any signs of weakness.\n <\/p>\n \n September\u2019s report was anything but.\n <\/p>\n \n \u201cA truly monster jobs number today,\u201d Chris Rupkey, chief economist at FwdBonds LLC, wrote in commentary issued Friday.\n <\/p>\n \n \u201cThe economic expansion remains on course for now,\u201d he wrote. \u201cThe outlook for the economy in the months ahead is quite favorable, according to the September jobs report. The economy could end the year on a high note after weathering the growth and employment markets scare a couple of months ago.\u201d\n <\/p>\n \n The job market has cooled significantly during the past year as it settled back into balance following the pandemic<\/a> whiplash<\/a>. It has also slowed as the central bank\u2019s inflation-fighting interest rate hikes<\/a> slowly fed through to all the crevasses of the economy.\n <\/p>\n \n As job gains dropped off from their once breakneck pace<\/a>, economists were quick to note that the labor market was merely slowing and not at risk of imminent collapse.\n <\/p>\n \n The underlying fundamentals were solid, they said, noting how high shares of the population were employed and that the unemployment rate ratcheting up was a reflection of more people looking for jobs versus losing them.\n <\/p>\n \n Although anxiety spiked following a weaker-than-expected July jobs report<\/a> coupled with a drastic downward annual employment numbers revision<\/a>, August\u2019s solid job gains and Friday\u2019s report \u2014 which included upward revisions to both July and August \u2014 should put those concerns to rest, Elise Gould, senior economist at the Economic Policy Institute, said in an interview.\n <\/p>\n \n \u201cThe labor market is strong,\u201d she said. \u201cWhen we compare it to four years ago, during the pandemic, it\u2019s clearly much stronger; but even when you compare it to 2019, before the pandemic began. Real wage growth is up, a lot of jobs have been added.\u201d\n <\/p>\n \n Average hourly earnings grew 0.4% for the month, bringing the annual rate up to 4% from 3.9% seen in August, according to Friday\u2019s report.\n <\/p>\n \n Through September, the US has added an average of 199,000 jobs per month, which is below the 251,083 jobs added on average last year but still outpaces pre-pandemic gains, BLS data shows. The US also remains in a period of historic employment expansion: With September\u2019s gains, the economy has seen positive job growth for 45 months, matching the fourth-longest streak on record.\n <\/p>\n \n While people, by and large, are more likely to have a job and more likely to have higher wages, that doesn\u2019t mean there isn\u2019t still pain in the labor market or within household finances, Gould said. But the trajectory has been one of improvement, she noted.\n <\/p>\n \n \u201cNominal wages have been rising faster than inflation for at least 16 months in a row now,\u201d she said. \u201cWhen you compare back before that inflation spike, back to 2019, real wages are up and their purchasing power is up, so living standards are increasing.\u201d\n <\/p>\n \n With inflation moving closer toward the Fed\u2019s 2% target rate, the central bank has shifted its focus to ensuring the other side of its dual mandate \u2014 employment \u2014 remains healthy.\n <\/p>\n \n Last month, the Fed surprised with a jumbo-sized, half-point rate cut<\/a>.\n <\/p>\n \n Noting that the labor market was in \u201csolid condition,\u201d Fed Chair Jerome Powell said at the time that the \u201cintention with our policy move today is to keep it there.\u201d\n <\/p>\n \n While there\u2019s no direct cause between the half-point cut and September\u2019s shockingly strong job gains (monetary policy actions are slow-moving beasts), Friday\u2019s report is likely more a reflection of the lower interest rates to come.\n <\/p>\n \n \u201cThe move by the Federal Reserve was a positive signal, because it\u2019s basically said that we\u2019ve crested in terms of rates, and there\u2019s some relief in terms of lower rates coming down the pipeline, especially for small business,\u201d Bethune said. \u201cIf they were holding back on hiring because they didn\u2019t know exactly the path of where interest rates were going a few months ago, now they\u2019re saying, \u2018We see relief on the horizon; we see our borrowing rates coming down, so we can go ahead and do some of the hiring that we had delayed for a couple of months.\u2019\u201d\n <\/p>\n \n Last month\u2019s job growth also should go a long way in eliminating any need for urgency from the Fed, Josh Hirt, senior US economist at Vanguard, told CNN.\n <\/p>\n \n \u201cI think that [the Fed] will still continue with a relatively deliberate plan of rate cuts,\u201d Hirt said. \u201cThis would remove the strong case for moving more aggressively. \u2026 But, I think there\u2019s a pretty high bar for them to pause altogether, given what they\u2019ve started.\u201d\n <\/p>\n \n The Fed\u2019s next policymaking decision is due out November 6, the day after the election and a few days after the October jobs report is released.\n <\/p>\n \n It\u2019s possible that the October employment report could be a lot noisier than typical, as the employment figures could be depressed by the ongoing strike of Boeing workers<\/a> as well as those displaced by the devastating and deadly Hurricane Helene<\/a>.\n <\/p>\n