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Jobs growth in the US accelerated in September, confounding analysts’ expectations and adding to investors’ anxieties that interest rates will stay higher for longer.
Numbers from the Bureau of Labor Statistics showed that US employers added 336,000 new jobs in September. That marked a sharp step up from August’s figure, which was revised up by 40,000 to 227,000. Economists surveyed by Bloomberg had expected a September reading of 170,000.
The unemployment rate came in at 3.8 per cent in line with August’s figure and slightly higher than expectations of 3.7 per cent.
Average hourly wages rose by 0.2 per cent month on month, matching the rise reported in August but coming in below expectations of 0.3 per cent growth. On an annual basis, wages rose by 4.2 per cent, compared with 4.3 per cent in the prior period.
The report will offer the Fed an important data point as the central bank decides whether its mission to quell inflation is succeeding — or whether rates, already at a 22-year high, need to rise further. The Fed meets again at the end of the month.
The figures are likely to add to investor anxiety over interest rates staying “higher for longer”. US Treasury yields leapt on Friday in response to the stronger than expected US jobs data, giving fresh impetus to a recent sell-off in bond markets, while stock futures dropped.
The yield on the policy-sensitive two-year Treasury jumped almost 0.1 percentage point to 5.12 per cent in the minutes after the report. The yield on the benchmark 10-year note added 0.11 percentage points to 4.82 per cent, while the 30-year yield — which this week touched its highest level since 2007, before retreating slightly — gained 0.11 percentage points to just under 5 per cent.
Futures tracking the S&P 500 swung to be 0.9 per cent lower ahead of the New York open, while futures tracking the Nasdaq 100 were down 1.1 per cent.
The Fed held interest rates at 5.25-5.5 per cent at its most recent meeting on September 20. But most of the central bank’s officials expect one more increase in 2023 and a slower pace of cuts over the next two years, according to data from the Fed.
Fed chair Jay Powell recently said that the central bank would proceed “carefully” with its next interest rate decisions. Many officials have stressed that the central bank can afford to be “patient” after raising interest rates several times over the past 18 months.
Mary Daly of the San Francisco Fed said on Thursday the central bank did not have to “rush to any decisions” given that “monetary policy is restrictive and financial conditions are tight”.
Source: Economy - ft.com
