This week, we are breaking down the latest “First Friday” jobs report. The U.S. labor market outperformed expectations in September, following a string of jobs reports showing the economy moving in the wrong direction.
The economy added 254,000 jobs in September, surpassing expectations of around 150,000. Reversing recent trends of downward revisions, hiring totals for July and August were revised upward by a combined 72,000 jobs. For the second month in a row, the unemployment rate ticked down, reaching 4.1%. Wages grew by 4% over the past 12 months, up from 3.8% in August.
Labor market momentum has stalled - and even reversed - in recent months. However, September's jobs report points to an economy that is normalizing, not backsliding. One month of data doesn't create a trend, but this report indicates that the labor market was doing a bit better than we thought over the past couple of months.
💡 The labor market appears to be stabilizing after months of less-than-stellar reports. However, there's plenty of uncertainty on the horizon:
- U.S. elections will decide the next President as well as which political party controls Congress, but new policy priorities will likely take months to enact and even longer for businesses to feel the effect.
- Continued turmoil abroad could create broader challenges, but the U.S. economy has been relatively resilient to these developments in recent years.
- Hurricane Helene devastated parts of the east coast, and it's likely to have an impact on October's employment totals.
💡 For businesses, the messages from the September jobs report are continued normalization and movement away from potential recession. Hiring volumes are slower. But it's still a tight labor market, and compensation is not cooling at the pace we expected heading into 2024.
📊 Job gains | Picking up some momentum
The 254,000 new jobs added by U.S. employers in September is getting all the headlines - and rightfully so. This is the highest monthly total since March of this year. Through the first nine months of 2024, the labor market has added 1.8 million new jobs, an average of 200,000 each month.
🍽️ Industries | A few sectors continue to dominate
It's hard to find much negative news in this month's report.
However, the biggest challenge in the labor market continues to be job gains concentrated in just a few industries - Leisure and Hospitality (+78,000), Healthcare (+45,000), and Government (+31,000). The "big three" accounted for nearly two-thirds of all jobs added in September. Manufacturing (-7,000) was the only major sector to lose jobs last month.
💡Other bright spots:
- Construction (+25,000) hiring was bolstered by job gains for specialty trade contractors, including plumbers, electricians, painters, and concrete pourers. Despite challenges of high interest rates, Construction continues to add jobs at a solid pace.
- Information (+4,000), which includes tech and media companies, has been a weak spot in the labor market and still has 12,000 fewer jobs compared to a year ago. While media struggled last month, tech companies (computing infrastructure and web search portals) combined to add over 6,000 jobs.
💼 Unemployment rate | Ticking down again
The unemployment rate came down for the second straight month, and for all good reasons. The number of employed workers went up, and the number of unemployed job seekers went down. Sometimes a decline in the unemployment rate can be the result of disaffected job seekers leaving the labor force entirely.
💸 Wages and compensation | More good news for workers
After a few months of sub-4% annual growth, wages grew by 4.1% over the 12 months ending in September.
For workers, this is another month where wages have outpaced inflation. For businesses, even in industries that may be sluggish right now, it's important not to lose focus on compensation and talent retention.
HR teams and business leaders use LaborIQ for market-competitive compensation benchmarks. In an evolving job market, you need to know what salaries to offer to retain employees and fill open positions faster.
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