RALEIGH — The September national job report was a shocker. Most analysts had been expecting a net increase in jobs for September to be in the 150,000 to 200,000 range.
Instead, the net increase in payroll jobs was an astonishing 336,000.
Leading the gain were jobs in leisure/hospitality, health care, and government.
A look behind the headline numbers gives some reasons for the big gain.
First, as we have seen in recent months, the labor force again expanded, this time by 90,000 people. This means that 90,000 people who did not have a job and were not looking for a job joined the labor force and took a job.
We also saw a drop in part-time employment in September and an increase in workers holding multiple jobs. Except for the jump in multiple job holders, these trends are positive and show increased confidence in the economy. The exception — the increase in multiple job holders — can be a tactic for households struggling to increase their income.
All in all, the surprising September job report shows we are continuing to move back to the pre-Covid economy. More people want to work, and sectors that were devastated during the pandemic — such as leisure/hospitality — are hiring as their customer base returns. Consumer spending, while slowing, has still been robust. Consumers continue to make up for the spending they couldn’t do during Covid.
What will worry the financial markets today is whether the robust labor market news can co-exist with moderation in the inflation rate. Will the Fed take today’s news as an indication that higher interest rates are still needed in the fight against inflation?
Or, will Fed decision-makers interpret the good labor market news as not being incompatible with a slowing inflation rate?
The September inflation rate — to be released next week — may give us an answer.