The U.S. job market experienced a significant slowdown in September, with employers adding only 29,000 jobs, which is much lower than the previous month. This figure is also weaker than what forecasters were expecting. The job gains for July and August were revised down by a total of 60,000, and the updated figures show a net loss of jobs during July. Despite this, most industries are not showing a massive number of layoffs.
According to Sarah House, a senior economist at Wells Fargo, the job market is "inching along in low gear." While there is modest hiring, the good news is that there are not many layoffs. However, it is challenging for workers who lose their jobs or are new to the labor force to find employment due to the lack of turnover. This slowdown in hiring can be attributed to various factors, including the current state of the economy and inflation.
The slowdown in hiring is also reflected in the wage growth, which has not been keeping pace with rising prices. In September, average wages were up only 3% from a year ago, which is a slowdown from the previous month. This means that the typical worker is losing some buying power month after month. The rising prices and stagnant wages are a concern for many Americans, especially as they head into the holiday season.
Inflation is still high, although it has decreased slightly. The Commerce Department released its inflation scorecard for August, which showed that prices were up 3.4% from a year ago. The rising gas prices are a significant contributor to this increase. If energy and food prices are excluded, inflation was more modest at 3%, but it is still above the target set by the Central Bank.
The Federal Reserve has raised its benchmark interest rate in an effort to control inflation. Rebecca Venter, who monitors interest rates at Vanguard, says that investors are now wondering how much higher borrowing costs are likely to go. The Fed has reaffirmed its commitment to bringing inflation back to its 2% target, and the question is whether growth is strong and inflation is sticky, and where rates need to go to meet this goal.
The long-term interest rates set by the bond market have been increasing rapidly, pushing up borrowing costs for everyone. The yield on 10-year Treasuries is up around 5.25%, and the average rate on a 30-year mortgage is just under 7.25%. This increase in borrowing costs can affect many people's decisions, such as buying or selling homes.
Several factors are contributing to the increase in borrowing costs, including stubborn inflation, concerns about the size of the federal debt, and more competition for credit. The federal debt has ballooned to $40 trillion, double what it was nine years ago. Additionally, consumers are stretched thin, with personal spending jumping almost a full percentage point last month, but personal income rising much more slowly.
Key points
- U.S. employers added only 29,000 jobs in September.
- The job market is experiencing a slowdown, with wage growth not keeping pace with rising prices.
- Inflation is still high, and the Federal Reserve has raised interest rates to control it.
