The Employment Situation for September 2024

Editor's Note: This report is based on survey data from August 2024 that was published in September 2024. This is the most recent data available. (Source: Bureau of Labor Statistics)

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For the first time in 5 months, the US unemployment rate has started coming down again, albeit ever so slightly from about 4.2% to 4.1%.

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US employers also added 142 thousand jobs to their payrolls, which was a decent performance although about 20 thousand jobs fewer than expected. Downward revisions of the job numbers from the previous 2 months were a bit more substantial, however, accounting for about 80 thousand fewer jobs than previously reported.

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The labor force participation rate held steady at about 62.7 million and has been pretty consistent all year long.

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The number of people who have part-time jobs because full-time work was not available also essentially held steady at 4.8 million, but it is worth noting that this figure is up almost 15% from 4.2 million just 12 months ago. This change may in part represent a growing number of both employers and employees that have been navigating the softening economy and labor market and waiting for interest rates to come down before reevaluating their labor demand - a wait that will likely soon be over.

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Among the 142 thousand jobs added to US employer payrolls last month, the construction industry claimed the largest share, with 34 thousand new jobs - almost an 80% increase over the approximate 19 thousand jobs added by the construction industry on average each of the last 12 months.

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The healthcare industry wasn’t far behind with 31 thousand jobs added last month, but that figure represents a significant slow down in healthcare hiring and a major underperformance relative to the approximate 60 thousand jobs by which payrolls in the healthcare industry have increased on average each month over the last year.

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The social services industry also added about 13 thousand jobs, down from an average monthly gain of 21 thousand.

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While there was little to no change in job figures across the majority of the remainder of industries, the manufacturing industry actually saw a fairly significant reduction in jobs last month, losing 25 thousand positions in the durable goods production industries.

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Average hourly pay rose by 4 cents last month, climbing to $35.21 per hour and representing a 0.4% increase over the month before. Average hourly pay has increased by 3.8% over the last year, outpacing inflation by nearly a percentage point over the same time frame.

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The average workweek on the other hand increased by one-tenth of an hour up to 34.3 hours per week. In the manufacturing sector, however, the average workweek held steady at about 40 hours per week, but the average amount of overtime inched up one-tenth of a point as well to 3 hours per week.

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Mployer’s Take

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Last month, Federal Reserve Chair Jerome Powell said that Fed policy goals no longer include any further softening of the labor market, which paves the way for the first interest rate cuts since the Fed began raising rates 2 and a half years ago.

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The Fed is expected to lower interest rates when they meet next week and this latest jobs report further solidifies that likelihood, but the main remaining question is how big of a cut they will implement. 

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With inflation now down below 3% on an annualized basis, some Fed watchers are expecting a 50 basis point interest rate cut, but the majority seems to be rallying around a more modest 25 basis point cut given the remaining resilience in the job market and economy in addition to the continuing upward pressure on wages.

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To be clear, however, a 50 basis point rate cut is still a very real possibility, and is only slightly less likely than a 25 basis point cut.

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It’s only a little over a week before September 18th when the Fed is expected to announce whether or not they will be cutting interest rates, and if so by how much, so the speculation about whether and how much rates will be cut this time will very soon be replaced by speculation about whether and how much interest rates will be cut next time when the Fed meets again in the first week of November.

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Nothing is certain, of course, but it does seem like some interest rate relief may at long last be at hand. 

While it took less than a year and a half for the Fed to increase interest rates from practically 0 to over 5 and a half percent (in increments of a quarter and half point at a time), however, it is likely going to take much, much longer to bring interest rates back down by even half of the increase we’ve seen since the pandemic.

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We still appear to be on track for a relatively soft landing where inflation is tamped down without triggering a swift onset recession, but in order to maintain the delicate balance necessary to avoid some of the worse potential outcomes, this soft landing is going to occur over a very long period of time. 

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Check out the Mployer blog here.