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US Jobs Report Surprises with Strong Job Growth and Unemployment Dip

The September jobs report showed a stronger-than-expected labor market, pushing financial markets higher and the Dow to a record high today, while all but eliminating any chance of a 50bp rate cut from the Fed in November.

The September jobs report saw the US economy defy expectations, adding 254,000 jobs, a figure well above the anticipated 150,000. This robust job growth, accompanied by a dip in the unemployment rate to 4.1% from 4.2% in August, reflects the labor market’s surprising resilience in the face of ongoing economic uncertainty.


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The September jobs report, released by the Bureau of Labor Statistics, marked a significant improvement from the revised totals of 159,000 for August and 144,000 for July. In addition, wage growth also continued its steady climb, with a year-over-year increase of 4%, up slightly from 3.8% in the previous month. These developments come at a time when the U.S. economy faces scrutiny ahead of the 2024 presidential election, as candidates weigh the broader economic picture against these positive indicators.

September Jobs Report Shows Gains in Multiple Sectors

The job growth in September was driven by specific sectors, with food services and drinking places leading the charge by adding 69,000 new positions. Other notable gains were seen in healthcare (45,000), government (31,000), and construction (25,000). However, the manufacturing sector experienced a setback, shedding 7,000 jobs.

Guy Berger, director of economic research at the Burning Glass Institute, highlighted the uneven nature of the recovery, stating that “the labor market remains healthy overall, but the distribution of job gains points to some weakness.” Sectors like manufacturing and finance have not benefited equally from the recovery, with many companies learning to operate efficiently with fewer employees. “Firms are simply figuring out how to do more with fewer employees,” Berger noted.

Full-time employment saw a notable increase of over 400,000 positions, while part-time jobs fell by 95,000, highlighting a shift toward more stable employment. However, challenges persist for job seekers. The number of individuals working multiple jobs reached an all-time high of 8.659 million, indicating that many Americans are still grappling with financial insecurity despite the broader economic gains.

Market Reactions and Federal Reserve’s Role

The September jobs report sent ripples through financial markets, with U.S. stocks rallying in response. The Dow Jones Industrial Average hit a record high, closing at 42,352.75, while the S&P 500 and Nasdaq Composite posted gains of 0.9% and 1.22%, respectively. Investors were buoyed by the strong labor market data, which alleviated some concerns about an impending recession.

Michelle Cluver, head of ETF model portfolios at Global X, stated:

“After a summer of weak labor data readings, this is a reassuring sign that the U.S. economy remains resilient.”


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Cluver’s sentiment echoed that of many market analysts who, after months of uncertainty, now see the possibility of a “soft landing” for the U.S. economy—a scenario where inflation is tamed without triggering a recession.

The Federal Reserve’s recent moves to cut interest rates, including an unexpectedly large rate cut last month, are also seen as crucial in sustaining economic momentum. Economists are forecasting additional cuts in November and December, with more likely to follow next year.

However, some, like Paul Ashworth, chief North American economist at Capital Economics, believe the labour market’s strength may give the Fed reason to pause.

Indicating that the urgency for aggressive rate cuts may have dissipated, Ashworth stated:

“Any hopes of a [50 basis point] cut are long gone.”

The Road Ahead for Job Seekers

While the labor market appears strong, many Americans are still feeling the effects of a slow recovery. The share of unemployed workers who have been out of work for more than six months has increased, now standing at 23%. This mirrors pre-pandemic levels, but it underscores the difficulties many face in re-entering the workforce.

“We now have more breathing room for the Fed to ease and keep the labor market in a relatively decent place,” Berger said. However, he added that it might take time before job seekers see significant improvements. “The chance of us getting to a good time to find a job—it could be a while.”

Despite the overall positive job numbers, mixed signals remain about the health of the labor market. Weekly unemployment claims rose slightly to a three-week high of 225,000, and layoffs, though lower than expected, were up 53% from the previous year. This highlights the precariousness of the current situation—while the economy shows no immediate signs of slipping into recession, challenges remain.

As the economy approaches the 2024 election, the strength of the labor market will likely remain a key issue. Both Vice President Kamala Harris and former President Donald Trump are expected to emphasize their interpretations of the economic data as they vie for voter support. However, with continued volatility in global markets and rising oil prices, the path forward remains uncertain.

Markets Rise, Dow Hits Record High

US financial markets rose today in response to the better-than-expected jobs report, with the Dow Jones Industrials Average ($DOWI) rising 0.81% to close at a new all-time high of 42,352.75.

The S&P 500 Index ($SPX) climbed 0.9% to close at 5,751.07, while the NASDAQ Composite ($NASX) closed at 18,137.85, up 1.22% on the day.

The SPDR SP 500 ETF Trust (NYSE Arca: SPY), a popular ETF that effectively mimics the performance of the S&P 500 Index closed at $572.98, up 0.91%.

The Russell 2000 Index (RUT), a small-cap index consisting of the smallest 2,000 stocks in the Russell 3000 Index (RUA) climbed 1.5% to close today’s trading session at 2,212.80.

The Russell 2000 Ishares ETF (IWM), an ETF that tracks the Russell 2000 Index jumped 1.4%, closing the day at $219.15.

The Russell Microcap Index (RUMIC) finished the day at 771.33, up 1.71%

Dow Jones Industrial Average ten year candlestick stock chart.
Dow Jones Industrial Average (DJIA) ten-year interactive stock chart. (Source: Barchart) – Click chart to enlarge.

View Dow Jones Interactive Stock Chart on Barchart


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Disclaimer: Wealthy VC does not hold a long or short position in any of the stocks, ETFs or cryptocurrencies mentioned in this article.

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