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Economic News

United States: Job Creation Was Surprisingly Robust

October 4, 2024
Francis Généreux
Principal Economist

Highlights

  • According to the establishment survey, total nonfarm payroll employment went up 254,000 in September.
  • Average hourly wage growth was 0.4% in September after a 0.5% increase in August. Year‑over‑year change is 4.0%, up from 3.9% the month before.
  • The household survey had even better results, with 430,000 jobs added. Unemployment fell for the second month in a row, from 4.2% to 4.1%.

Comments

While the establishment survey results for July and August were relatively disappointing, September's results beat all expectations. The 254,000 jobs added is the strongest report since March. It's also much higher than the consensus forecast, which according to Bloomberg had called for 150,000 jobs. The numbers for previous months were also revised upwards. Net new hires jumped from 142,000 to 159,000 in August and from 89,000 to 142,000 in July. This is the largest two‑month revision since September 2023, excluding annual revisions.

 

Wage growth held strong, climbing more than 0.4% for the second month in a row. The 3‑month annualized change rose to 4.3%, the highest since January. Even so, productivity remains especially robust in the United States, which means that salaries can increase more sharply without causing a surge in inflation.

 

Of the 250 industries covered by the survey, the proportion where employment grew rose from 51.8% in August to 57.6% in September. This is the highest it's been since January. Out of the major industries, only a few posted net layoffs in September: manufacturing (particularly the motor vehicle sector, with 6,500 fewer jobs), transportation and warehousing and—once again—temporary help services.

 

For the second month in row, the household survey results are painting a brighter monthly picture than those of the establishment survey. And what's more, the gain of 430,000 jobs in September was also the highest growth posted since March. That being said, we shouldn't forget that this survey tends to be more volatile than the establishment survey. But the drop in unemployment is nevertheless welcome, as this summer's upswing had caused a lot of concern. It's harder to worry about an imminent recession when employment is clearly on the rise (according to both surveys) and unemployment is down.

Implications

September's strong labour market suggests that the US economy remains resilient. While other economic indicators aren't as positive, these more favourable results should still prompt Federal Reserve officials to keep normalizing monetary policy at a moderate pace. They'll probably take further 50‑basis‑point cuts off the table, opting instead for 25‑basis‑point cuts, including one in November.

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