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The US added 263,000 new jobs in September

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  • The US added 263,000 new jobs in September as the Fed pushed to cool the economy.
  • Another month of solid US hiring suggests bigger Fed hikes.
  • In September, hourly wages increased 5% from the previous year.

U.S. employers cut hiring in September but still added 263,000 jobs, a strong figure that will likely keep the Federal Reserve raising interest rates aggressively to combat stubbornly high inflation.

Friday’s government report showed hiring fell from 315,000 in August to the weakest monthly increase since April 2021. The jobless rate fell from 3.7% to 3.5%, matching a half-century low, according to The Associated Press.

The US added 263,000 new jobs in September

job
Photo: AP

The Fed hopes that slower job growth will mean less pressure on employers to raise wages and pass those costs on to their customers through price increases, a recipe for high inflation.

But September’s hiring pace was probably too strong to satisfy the central bank’s inflation fighters. In September, hourly wages rose 5% from a year earlier, the slowest year-over-year pace since December but still higher than the Fed would like.

A “too strong” jobs report

FED
Photo: AP

The share of Americans who have jobs or are looking for one fell slightly, a disappointment for those who had hoped more people would enter the labor force and help ease the shortage of workers and the pressure on wages.

The jobs report «was still probably too strong to allow (the Fed) policymakers much room to breathe,» said Matt Peron, director of research at Janus Henderson Investors.

Where were the jobs added?

employment in usa
Photo: AP

Similarly, Rubeela Farooqi, chief US economist at High Frequency Economics, said she did not expect weaker September labor and wage figures to stop the Fed from raising its benchmark short-term rate in November by three-quarters, an unusually high increase for the fourth time in a row, and by an additional half point in December.

Last month, restaurants and bars added 60,000 jobs, as did health care companies. State and local governments cut 27,000 jobs. Retail, transportation and warehousing companies modestly reduced employment.

What can be expected from inflation?

unemployment
Photo: Shutterstock

Public anxiety over high prices and the prospect of a recession is having political consequences as President Joe Biden’s Democratic party battles to maintain control of Congress in November’s midterm elections.

According to the AP, in its epic battle to control inflation, the Fed has raised its benchmark interest rate five times this year. Its goal is to slow economic growth enough to reduce annual price increases toward its 2% target.

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