Washington: Hiring in the US economy slowed slightly in September, as expected, while the jobless rate ticked back down to the same level as July, the government reported Friday.
The steady slowdown in new positions added in the world’s largest economy is good news for the Federal Reserve as it works to cool the economy and tamp down rampant inflation.
But the central bank likely will want to see more progress on slowing price gains, which have been the fastest in 40 years, before pulling back on its aggressive interest rate increases.
The data showed 263,000 jobs were added last month, while the unemployment rate slipped two-tenths of a percentage point to 3.5 percent, the Labor Department said.
And of more concern for policymakers, the report showed a 10-cent increase in average hourly earnings in the month to $32.46.
Over the past 12 months, average hourly earnings have increased by 5.0 percent, and the Fed is watching closely to see if wages accelerate, which would fuel further inflation pressures.
“A moderation in job and wage growth will be welcome developments for Fed officials. However, these data do not change the near-term course of monetary policy,” Rubeela Farooqi of High Frequency Economics said in an analysis.
The Fed has raised the benchmark lending rate five times this year and said more tightening will be needed to get inflation down, but acknowledge that the process could cause a painful economic slowdown.
And Fed officials in recent comments have made it clear that no single data report will change their trajectory since it will take time for inflation to get back down to the two percent goal.
– Worker shortage? –
Fed board member Christopher Waller warned that given ongoing price pressures, including from the US housing market, inflation is “not likely to fall quickly.”
“We haven’t yet made meaningful progress on inflation, and until that progress is both meaningful and persistent, I support continued rate increases,” Waller said in a speech Thursday.
Still, Robert Frick, corporate economist with Navy Federal Credit Union, called the September data “a Goldilocks jobs report.”
He said it was “cool enough to make the Fed happy that the ‘tight’ labor market is loosening, and warm enough to satisfy most Americans looking for work, or looking to switch jobs for higher pay.”
US employers continue to complain that they have difficulty filling open positions, and the Fed also wants to see signs of an easing in the tight labor market.
The data showed notable gains in the leisure and hospitality sector and in health care, and a decline in government jobs.
The unemployment rate, which edged up in August as more workers came off the sidelines to join the labor force, slipped back last month, and the participation rate was barely changed at 62.3 percent as the pool of available workers was about steady.
Hurricane Ian, which caused massive devastation, especially in Florida, “had no discernible effect” on the data, which was collected before the storm made landfall.