https://ift.tt/Eg6T7Zs employers slowed their hiring in September but still added a solid 263,000 jobs — potentially hopeful news that may mean the Federal Reserve’s drive to cool the job market and ease inflation is starting to make progress.
Friday’s government report showed that last month’s job growth was down from 315,000 in August and that the unemployment rate fell from 3.7% to 3.5%, matching a half-century low. Last month’s job gain was the smallest since April 2021.
September’s slightly more moderate pace of hiring may be welcomed by the Fed, which is trying to restrain the economy enough to tame the worst inflation in four decades without causing a recession. Slower job growth would mean less pressure on employers to raise pay and pass those costs on to their customers through price increases — a recipe for high inflation.
Still, the Fed would need to see more sustained evidence that hiring and pay gains are slowing before it would moderate its interest rate hikes as it fights inflation. In September, hourly wages rose 5% from a year earlier — the slowest year-over-year pace since December but still hotter than the Fed would want. The proportion of Americans who either have a job or are looking for one slipped slightly, a disappointment for those hoping that more people would enter the labor force and help ease worker shortages and upward pressure on wages.
Leisure and hospitality companies, including hotels, restaurants and bars, added 83,000 jobs last month. Health care and social assistance employers gained 75,000 jobs, factories 22,000. But governments cut jobs. Retailers, transportation and warehouse companies reduced employment modestly.
The public anxiety that has arisen over high prices and the prospect of a recession is carrying political consequences as President Joe Biden’s Democratic Party struggles to maintain control of Congress in November’s midterm elections.
In its epic battle to rein in inflation, the Fed has raised its benchmark interest rate five times this year. It is aiming to slow economic growth enough to reduce annual price increases back toward its 2% target.
It has a long way to go. In August, one key measure of year-over-year inflation, the consumer price index, amounted to 8.3%. And for now, consumer spending — the primary driver of the U.S. economy — is showing resilience. In August, consumers spent a bit more than in July, a sign that the economy was holding up despite rising borrowing rates, violent swings in the stock market and inflated prices for food, rent and other essentials.