WASHINGTON, D.C. — America’s employers added a surprisingly strong 254,000 jobs in September, easing concerns about a weakening labor market and suggesting the pace of hiring is still solid enough to support a growing economy.
Last month’s gain was far more than economists had expected, up sharply from the 159,000 jobs added in August. And after rising for most of 2024, the unemployment rate dropped for a second straight month, from 4.2% in August to 4.1% in September, the Labor Department said Friday.
The latest figures suggest that many companies are still confident enough to fill jobs despite the continued pressure of high interest rates.
In an encouraging sign, the Labor Department also revised up its estimate of job growth in July and August by a combined 72,000. Including those revisions, September’s job gain — forecasters had predicted only around 140,000 — means that job growth has averaged a solid 186,000 over the past three months. In August, the three-month average was only 140,000.
“There’s still more momentum than we had given it credit for,” Stephen Stanley, chief economist at the banking company Santander, said of the job market. “I would call it solid — certainly not as explosive as what we were seeing last year or the year before when we were catching up from the pandemic. But the pace of job growth overall is very healthy.’’
The September job gains were fairly broad-based, a good trend if it continues. Restaurants and bars added 69,000 jobs. Health care companies gained 45,000, government agencies 31,000, social assistance employers 27,000 and construction companies 25,000. A category that includes professional and business services added 17,000 after having lost jobs for three straight months.
Average hourly raises were solid, too. They rose by a higher-than-expected 0.4% from August, slightly less than the 0.5% gain the month before. Measured from a year earlier, hourly wages climbed 4% in September, up a tick from a 3.9% year-over-year gain in August.
The economy’s progress in taming inflation led the Federal Reserve last month to cut its benchmark interest rate by a sizable half-point, its first rate cut in more than four years, and said further cuts were likely in the coming months. The Fed said it wanted to ease the cost of borrowing to help bolster the job market. In light of Friday’s strong jobs report, the Fed is now likely to reduce its key rate by more typical quarter-point increments.
“The September jobs report shows a nice bump in labor demand at the beginning of the fall,” said Bill Adams, chief economist at Comerica Bank. “The U.S. economy is growing solidly in 2024 even as inflation slows to near the Fed’s target.”
The resilience of the economy has come as a relief. Economists had long expected that the Fed’s aggressive campaign to subdue inflation — it jacked up interest rates 11 times in 2022 and 2023 — would cause a recession. It didn’t. The economy kept growing even in the face of ever-higher borrowing costs for consumers and businesses.
Most economists say the Fed appears to have achieved the once-unlikely prospect of a “soft landing,” in which high interest rates help vanquish inflation without triggering a recession.
The economy is weighing heavily on voters as the Nov. 5 presidential election nears. Many Americans are unimpressed by the job market’s durability and are still frustrated by high prices, which remain, on average, 19% above where they were in February 2021. That was when inflation began surging as the economy rebounded with unexpected speed and strength from the pandemic recession, causing severe shortages of goods and labor.
The public’s discontent with inflation and the economy under President Joe Biden has been a political burden for Vice President Kamala Harris in her race for the White House against former President Donald Trump.
The jobs report for October, which the government will issue four days before Election Day, will likely be muddied by the effects of Hurricane Helene and a strike by Boeing machinists.
Across the economy, though, most indicators look solid. The U.S. economy, the world’s largest, grew at a vigorous 3% annual pace from April through June, boosted by consumer spending and business investment. A forecasting tool from the Federal Reserve Bank of Atlanta points to slower but still healthy 2.5% annual growth in the just-ended July-September quarter.
Given Friday’s robust hiring report, economists say the Fed will almost certainly cut its benchmark rate in November by a modest quarter-point after its larger-than-usual half-point reduction in September.
