Job growth was stronger than expected in September, a sign that the U.S. economy is hanging tough despite higher interest rates, labor strife and dysfunction in Washington.
Nonfarm payrolls increased by 336,000 for the month, better than the Dow Jones consensus estimate for 170,000 and more than 100,000 higher than the previous month, the Labor Department said Friday in a much-anticipated report. The unemployment rate was 3.8%, compared to the forecast for 3.7%.
Stocks initially fell after the report but turned around through the morning. The Dow Jones Industrial Average accelerated more than 150 points after two hours of trading, while Treasury, though still positive on the session, eased as the 10-year note yielded 4.77%, up about 0.05 percentage point.
The payrolls increase was the best monthly number since January.
“Slowdown? What slowdown? The U.S. labor market continues to exhibit amazing strength, with the number of new jobs created last month nearly twice as large as expected,” said George Mateyo, chief investment officer at Key Private Bank.
Investors have been on edge lately that a resilient economy could force the Federal Reserve to keep interest rates high and perhaps even hike more as inflation remains elevated.
Wage increases, however, were softer than expected, with average hourly earnings up 0.2% for the month and 4.2% from a year ago, compared to respective estimates for 0.3% and 4.3%.
Still, traders in the fed funds futures market increased the odds of a rate increase before the end of the year to about 43%, according to the CME Group’s tracker.
“Clearly it’s moving up expectations that the Fed is not done,” said Liz Ann Sonders, chief investment strategist at Charles Schwab. “All else equal, it probably moves the start point for rate cuts, which has been a moving target, to later in 2024.”
Sonders said the bond market is “in the driver’s seat” as far as stocks go, a trend that accelerated earlier in the week after the Labor Department reported a jump…
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