A surge in US non-farm payrolls last month beat investors' expectations, the latest sign of accelerating economic momentum that spurred a fierce sell-off in bond markets and pushed long-term borrowing rates to fresh 16-year highs.
The Labor Department said Friday that employers added 336,000 jobs in September, the biggest increase since January and a sharp rise from a sharply revised 227,000 gain the previous month. Job growth in July was also stronger than previously estimated.
The report showed the U.S. economy gained momentum over the summer, driven in part by strong consumer spending. The big job gains keep the Fed on track to raise interest rates again this year. It also defied forecasters' expectations that higher interest rates, high inflation, the resumption of student loan payments and rising oil prices would lead to an economic slowdown.
The yield on the 10-year Treasury note rose to a new high after the better-than-expected jobs data. Us stocks closed higher.
The unemployment rate was flat at 3.8 percent in September, near a record low. To compete for limited labor resources, employers have steadily raised wages. Average hourly earnings rose 4.2 per cent in September from a year earlier, down slightly from 4.3 per cent in August. That is slower than a year ago, but well above pre-pandemic levels.
Employment at restaurants and bars returned to pre-pandemic levels last month, the Labor Department said. Employment increased in hospitals, nursing homes and truck drivers. The start of a new school year also helped boost employment.
Friday's report suggested that recent strength in the labor market could undermine the progress the Fed has made in slowing the economy. Accelerating job growth could undermine the confidence of Fed officials that the decline in inflation this summer will be sustained.
The report is unlikely to settle the Fed's debate over whether it should raise interest rates again. Officials will be closely watching next Thursday's consumer inflation report for September, as well as concerns about stronger growth that have pushed borrowing costs higher in the bond market.
The jobs report could confirm that the US economy has accelerated again, exacerbating the rise in bond yields. This week, the yield on the benchmark 10-year Treasury note topped 4.8% for the first time since 2007.
A sustained rise in Treasury yields would create new risks for the economy by raising the cost of mortgages, car loans and corporate loans. The average rate on a 30-year fixed-rate home rose to 7.53 per cent in the week ended September 29, the highest level since 2000, according to the Mortgage Bankers Association.