The Jobs Report – September 2023

Highlight

During September, the economy added 336K jobs, significantly higher than the 170K estimate, with private payrolls increasing by 263K, well above the 160K estimate. The prior two months’ job totals were revised higher by 119K, ending a string of downward revisions this year. The three-month average climbed to 266K, reversing the declining trend for the year. Even with the upside surprise, the YoY growth was 2.08%, the lowest this year.

What You Should To Know:

• The household survey showed employment grew by 86K and the unemployment rate was unchanged at 3.8%. The household survey showed a sharp slowdown in hiring over the past several months, diverging from the employment survey again.
• The job gains were broad-based with only temporary help and the information industry showing job losses. Service jobs were strong at a 234K increase. Leisure and Hospitality led Service sector gains, adding 90K. Manufacturing jobs grew by 29K, solid growth but down from last month’s gain of 47K.
• Average hourly earnings grew by 4.2% YoY, a slight deceleration from last month’s 4.3% increase. Wage gains have been solid and are now higher than inflation, giving workers a real wage increase. This has not been the case for much of the post-COVID recovery. Despite the solid gains, as of now, there is no evidence of a wage spiral that should worry the Fed.
• This is an unambiguously good employment report, breaking a string of softer employment releases this year. Does this mean that the economy is reaccelerating this fall? We will need to see more evidence of the sharp economic growth that this data implies. Leading indicators in this report like overtime hours and temporary employment did not show the signs of acceleration the headline number might imply. However, this report will likely put the market on alert for a Fed response at their November meeting.