The robust job growth in the United States contributes to rising rate expectations

The number of jobs in the United States increased by a larger margin than was anticipated during the previous month, fueling anticipation that interest rates may go even more.

According to numbers issued by the Labor Department, employers added 336,000 positions in September, which is nearly double the 170,000 jobs that were projected to be added.

It was initially reported that 187,000 jobs were created in August, however the numbers have since been revised up to show that 227,000 jobs were created in August.

The rate of unemployment in the United States stayed the same at 3.8%.

In September, the leisure and hospitality industry alone added 96,000 jobs, which is above the typical monthly gain. Employment in food services and bars rose by 61,000 over the course of the month, reverting to levels that existed before the pandemic.

But even while the number of available jobs increased, salary growth remained moderate on a monthly basis in September, with average hourly wages having increased by 4.2% in the year leading up to September.

The United States Federal Reserve left its benchmark interest rate unaltered one month ago as it deliberates on whether or not it has done enough to stabilize inflation, which refers to the rate at which prices are increasing.

The current target range for interest rates set by the Federal Reserve is the highest it has been in more than twenty years. As of March 2022, the central bank has increased the cost of borrowing money from very close to zero in an effort to stem the tide of growing prices.

The durability of the labor market, despite the efforts of the Federal Reserve to slow down the economy, has led to speculation that interest rates will continue to be kept at historically high levels for some time.

The number of 336,000 new jobs “blows past even the most bullish estimate,” according to Janet Mui, head of market analysis at RBC Brewin Dolphin, which is a financial management.

After the data released on Friday, market participants increased their wagers that the Federal Reserve will increase interest rates before the end of the year and maintain them at a high level for a greater portion of the next year.

As the Covid epidemic swept throughout the world in 2020, the United States, like with many other countries, experienced significant losses in the number of jobs available, but employment increased significantly in 2021 and 2022 as limitations were loosened.

Since then, job growth has slowed down, although the 336,000 figure for September is significantly higher than the average seen before the pandemic.

The significant expansion in employment, according to Brian Coulton, chief economist at the ratings agency Fitch, will “keep upward pressure on wages,” which will make it more probable that the Federal Reserve has more room to increase interest rates.

Seema Shah, chief global strategist at Principal Asset Management, said that the statistics confirmed the “higher for longer narrative,” and she agreed that the Federal Reserve would “need to respond with more rate hikes.”

As a result of increasing expenses for rent and petrol, consumer prices in the United States climbed more than was anticipated in the month of September.

The annual rate of inflation, which is a measure of the rate at which prices are rising, was 3.7% in the 12 months leading up to August, which is an increase from the rate of 3.2% in July.

Although inflation has decreased dramatically from its high point a year ago, it is still significantly higher than the 2% target set by the Federal Reserve.

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