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September 2023 jobs report: 336,000 jobs added

October 09, 2023

The U.S. economy added 336,000 jobs in September 2023, marking an acceleration in labor market growth. See the details and potential market implications of the latest jobs report.

By Mary Mannion

Senior Associate, J.P. Morgan Wealth Management

By Mary Mannion

Key takeaways

The September 2023 jobs report from the Bureau of Labor Statistics (BLS) revealed that the U.S. economy added 336,000 jobs in September 2023, marking an acceleration in the pace of hiring.
Other key labor market indicators – including the 3.8% unemployment rate – remained stable in September 2023.
The resilience of the labor market could impact the Federal Reserve’s decision on whether more rate hikes will be necessary to bring inflation under control.

The U.S. labor market added 336,000 jobs in September.¹ This represents an acceleration in the pace of hiring from previous months – even after upward revisions raised July and August job growth numbers to 236,000 and 227,000, respectively.

“The September jobs report mirrored other recently released employment metrics and confirmed that the labor market remains resilient,” said Shawn Snyder, Global Investment Strategist for J.P. Morgan Wealth Management. “With the economy adding 336,000 jobs, the three-month average employment gain has been 266,000 jobs. That pace is more than sufficient to keep the unemployment rate from rising.”

Digging into the details

The overall unemployment rate – which had ticked higher in August to reach its highest level since February 2022 – stood steady at 3.8% in September. The labor force participation rate remained at 62.8% in September, while the employment-population ratio also stayed unchanged at 60.4%.²

Data on wage growth can also contribute to the inflation outlook and influence the Fed’s calculations. Average hourly earnings for all employees ticked 0.2% higher in September 2023. Including September gains, average hourly earnings have increased 4.2% over the past 12 months, marking a slight slowdown from the 4.3% year-over-year wage growth reported in August.³

On a sector basis, leisure and hospitality employment led the way in September 2023, with 96,000 job additions outpacing the average gains of 61,000 seen over the preceding 12 months. Within the category, food services and drinking establishments added 61,000 jobs during the month, returning to the pre-pandemic level of February 2020. Strong job gains also occurred in government and health care, which added 73,000 and 41,000 positions, respectively.⁴

Weaker areas of the labor market in September included the information sector, which saw a decline of 5,000 jobs during the month. This includes downward-trending employment in the motion picture and sound recording industries, which lost 7,000 positions in September and have seen declines of 45,000 jobs since May as work stoppages have affected Hollywood production schedules.⁵

Fed implications?

The state of the labor market is considered a key indicator in the Federal Reserve’s interest rate hiking decisions. At the most recent Federal Open Market Committee (FOMC) meeting on September 20, the Fed opted for a hiking pause, holding its key interest rate steady at 5.25% to 5.50%. However, officials remain “highly attentive to inflation risks” and will be monitoring economic conditions – including labor market data – to determine if more rate increases are necessary.⁶

The word “recession” has been muttered often, but “it is clear from these data that the economy is not in a recession,” Snyder said. “If anything, the economy appears to be accelerating in Q3. The downside of this ‘stronger-for-longer’ environment is of course the prospect of even higher interest rates. At some point, restrictive rates should do exactly what they are meant to do, which is to restrict growth. However, it doesn’t appear to be happening on a broad scale just yet.”

In his comments following the September meeting, Fed Chair Jerome Powell highlighted that a “meaningful rebalancing in the labor market without an increase in unemployment” represented progress toward the goal of limiting inflation. However, he noted that “a period of below-trend growth and some softening of labor market conditions” would likely be necessary to reach inflation targets.⁷

The October 12 inflation report is the next big indicator economists are looking toward to give insight into what the Fed’s next moves might be. “Expectations are that inflation should tick down a bit on a year-on-year basis from 3.7% to 3.6%,” said Snyder. “Still far away from the Fed’s 2.0% target, but – in theory – a solid jobs report and an anchoring of inflation should imply that the economy is on the path for a soft landing.”

The next FOMC meeting is scheduled for October 3–November 1.

References

Bureau of Labor Statistics. “The Employment Situation – September 2023,” (October 6, 2023).

Ibid.

Board of Governors of the Federal Reserve System. "Federal Reserve Issues FOMC Statement,” (September 20, 2023).

Board of Governors of the Federal Reserve System. "Transcript of Chair Powell’s Press Conference,” pages 4 & 10 (September 20, 2023).

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Key takeaways

Digging into the details

Fed implications?

References

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