US economy adds 263,000 jobs as labor market growth slows

US economy adds 263,000 jobs as labor market growth slows

Job growth continued to slow in September, in another sign that the labor market is cooling from its red-hot peak earlier this year, while remaining an area of ​​strength for the US economy.

Employers added 263,000 jobs last month, the Labor Department announced in its monthly jobs report Friday, ticking down from August and following months of strong job growth that has defined the pandemic recovery economy. It’s the lowest monthly increase since April 2021.

The unemployment rate fell to 3.5 percent, back to its level in February 2020, before the pandemic.

Even as other economic indicators soured in recent months, the labor market continued to boom. But the jobs outlook is shifting, with workers seeing moderated wage growth and employers slowing down hiring in anticipation of a slowdown in sales.

“Employers are mainly hiring for replacement rather than growth and expansion, and they’re focusing on essential roles,” ZipRecruiter economist Julia Pollak said. “But when push comes to shove, they’re still having to hire because they’re still seeing customers walking through the door and healthy sales.”

Ahead of Friday’s report, Wall Street forecasters had predicted a September figure of 250,000 jobs added.

The largest job gains were seen in leisure and hospitality, with 83,000 jobs added in September, one of the few sectors that has still not returned to its pre-pandemic levels — the industry is still 1.1 million jobs below its February 2020 level. Health care rose by 60,000 jobs, with strong gains in hospitals and ambulatory health services.

Professional and business services added 46,000 jobs. Temporary help services added 27,000 jobs. Losses in the temp industry are typically a bellwether for economic downturns.

Manufacturing, construction and wholesale trade continued to see strong growth. Transportation and warehousing, retail, government, and mining showed little change. Financial services employment declined slightly.

Nick Bunker, director of North American economic research for job site Indeed, said a slowing job market should not cause alarm.

“We have to change our expectations,” Bunker said. “The gains of earlier this year were astronomical, because we were in a very, very large hole when it came to jobs, and we are now getting something akin to full employment.”

Anxieties have flared over a potential downturn as the stock market has tumbled, inflation has soared and the housing market has cooled down. Nearly two-thirds of economists recently surveyed by Bankrate, a consumer financial services company, predicted a recession by mid-2024.

The Federal Reserve has warned that households and the labor market will experience some pain, as officials continue to raise interest rates to temper demand and thereby lower inflation. So far, the labor market has remained resilient, but it is far too early to see the full effects of the Fed’s monetary policy.

Other indicators suggest that the Fed is achieving its goal of softening the labor market without widespread layoffs.

Average hourly earnings continued to increase, but at a slower rate of 0.3 percent this month, to $32.46 an hour. Slower wage growth suggests that low-wage workers in particular are feeling the pinch of inflation even harder while employers have been able to attract workers without further increasing pay.

“To the extent that employers already raised wages earlier this year, those higher wages are still working to attract workers,” said Elise Gould, a senior economist at the Economic Policy Institute, a left-leaning think tank. “Wages aren’t falling, but they aren’t rising at the same rate.”

The labor force participation rate was little changed at 62.1 percent, an area where economists hoped to see more growth to ease labor shortages.

Employers in August had 10.1 million job openings, down about 10 percent compared with the previous month, according to a Labor Department report released Tuesday.

The continued tightness of the labor market has allowed workers to flex their muscles to demand better pay and working conditions. Last week, a three-day strike at San Francisco International Airport resulted in $5-an-hour raises for some 1,000 food service workers. Meanwhile, Amazon will face a union election next week at a warehouse near Albany, NY, which could result in the second unionized shop in the e-commerce giant’s vast logistics empire. (Amazon founder Jeff Bezos owns The Washington Post.)

But workers’ wage gains are still being wiped out by high inflation, which has disproportionately affected low-income households that devote a larger share of their income to food and housing, where prices have continued to rise sharply.

Jamika Ruffin, 29, makes $10 an hour as a cashier at a McDonald’s in Detroit, after seven years at the fast-food chain. She received a 25-cent raise in January but said that raise hasn’t gone far.

“We’re not living on these wages,” said Ruffin. “We’re surviving. The cost of living has gone up so much this year.”

Ruffin said she can’t always pay her phone bill and has to borrow money so that her daughter can go on field trips with her school. And at the end of the month, they visit soup kitchens for food.

The latest shifts in the labor market have helped some employers.

Jeff Ulmer, the owner of Action Hardware in Wilmington, Del., said he is having an easier time hiring after months of struggling to compete with larger employers for retail workers. High school students, he said, could find jobs at other places that start at $15 an hour, much more than he could afford to pay.

“We’ve had better luck recently,” Ulmer said. “The power between owner and employees had shifted, but it’s starting to go back the other way.”

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