The US labor market showed unexpected strength in September 2024, surpassing economic forecasts by adding 254,000 jobs, significantly higher than the projected 150,000.

This positive job growth signals the resilience of the US economy, with the unemployment rate falling to 4.1%, down from 4.2% in August. Key sectors such as food services, healthcare, and government roles led the gains.

According to the Bureau of Labor Statistics, revisions for July and August added 72,000 more jobs than initially reported, reflecting continued momentum.

Wages also saw a steady rise, increasing by 4% year-over-year, with a monthly bump of 0.4%, sustaining August’s pace.

Labor Market Strengthens as Rate Cuts Uncertain

The robust jobs data is likely to shift expectations around the Federal Reserve’s monetary policy.

Citi Senior Global Economist Robert Sockin noted that this report reduces the urgency for further aggressive rate cuts.

The Fed had previously cut interest rates by half a percentage point in September, but this latest jobs report could delay any additional cuts.

Before the report, there was speculation that the Fed might lower interest rates again in November, but after this stronger-than-expected performance, markets have significantly reduced the probability of such a move.

The CME FedWatch Tool showed a drop in the chances of a 50 basis point rate cut, from 53% to just 5%.

Stock Market Reacts to Positive News

Following the report, US stock futures rallied. The S&P 500, Dow Jones, and Nasdaq all saw gains, with the Nasdaq climbing by 1.1%.

Renaissance Macro’s Head of Economics, Neil Dutta, described the report as “undeniably good news” for the equity market, stating that the economy’s growth continues even as the Fed adjusts its policies.

Despite the positive job numbers, the labor force participation rate remained unchanged at 62.7%, highlighting that while job creation remains strong, the overall workforce size remains steady.