WASHINGTON–The labor market again showed strength in the newest data released by the federal government, adding 263,000 jobs during September, clearing the way for the Fed to again raise rates but also raising questions over whether doing so is the right thing to do, according to two credit union economists.
The new federal data show the unemployment rate fell to 3.5% to 3.7%, while the labor participation was little changed in September, at 62.%, around where it has hovered for the duration of the year but still below where it was before the pandemic.
Wages rose 0.3%, matching the prior month’s gain, according the government.
"The September employment report was more of the same as jobs expanded at a strong clip, the unemployment rate declined, and wages grew at a modest rate,” said NAFCU Chief Economist and VP of Research Curt Long. “There were no signs of easing labor force stains as the participation rate ticked down while average hours worked increased, This report is a clear green light to the FOMC to proceed with another 75 basis point hike next month.”
CUNA: Good News for Federal Reserve, But…
“The labor force participation rate declined slightly in September after showing signs of improvement in August,” noted CUNA Senior Economist Dawit Kebede. “The labor supply is still 1.1 percentage points below pre-pandemic level and may not fully recover. Hiring demand is also cooling down. In August, job openings declined by 1.1 million. This implies that the number of jobs available per unemployed person declined from 2 to 1.7. This is a big imbalance in labor demand and supply.
“A decline in hiring demand is good news for the Federal Reserve which is hoping to create some slack in the labor market,” Kebede continued. “However, a lower unemployment rate is not a step in the right direction when the Federal Reserve is tightening monetary policy to cool an overheating economy.”
The Federal Reserve is next set to meet Nov. 2.