Strong September Jobs Report Indicates Economic Resilience

Investing.com – A blowout September jobs report is “superb” and could enhance hopes for full U.S. employment with low inflation, as stated by Chicago Federal Reserve Bank President Austan Goolsbee.

However, in an interview with Bloomberg TV on Friday, Goolsbee noted that a broad range of measures shows that the labor market is still cooling, while emerging signs suggest inflation may fall short of the Fed’s 2% target.

He further commented that the central bank’s policy rate remains above an eventual “settling point” and may need to be adjusted down over the next 12 to 18 months.

These remarks follow a US employment growth figure that surpassed expectations in September, impacting forecasts for significant interest rate reductions by the Federal Reserve in its remaining two meetings of the year.

In September, the US economy added 254,000 jobs, a notable increase from an upwardly revised 159,000 in August, according to a closely watched Labor Department report from Friday. Economists had predicted an addition of 147,000 jobs.

Moreover, the unemployment rate decreased to 4.1%, down from August’s rate of 4.2%.

Average hourly wages grew by 0.4% month-over-month, exceeding the predicted 0.3%, though slightly slower than the upwardly adjusted 0.5% from August.

Analysts at ING indicate that the job market remains crucial for determining the pace of potential rate cuts, particularly as inflation appears to be easing—once the primary concern prompting a series of Fed borrowing cost hikes.

In earlier comments, Fed Chair Jerome Powell hinted at moving towards more traditional quarter-point rate reductions, emphasizing that the future path of rates is not predetermined. Powell reiterated that the Federal Open Market Committee is not “in a hurry to cut rates quickly,” despite the significant 50-basis point reduction announced during their meeting on September 17-18.