The U.S. job market showed strong growth in September, adding 336,000 positions, with the unemployment rate remaining stable at 3.8%, according to a U.S. Bureau of Labor Statistics report. One economist expects mortgage rates to rise as a result.
“This report certainly surprised the market, which had been expecting a slowdown and longer-term rates jumped in response. Mortgage rates will follow, which will likely mean that lending activity, which was already at a multi-decade low, is not going to pick up anytime soon," Mortgage Banker Association Chief Economist Mike Fratantoni said.
Despite the surge in hiring, major labor indicators saw little or no change over the month. Notably, the number of unemployed held steady at 6.4 million. Across demographics, unemployment rates showed minimal fluctuation.
Several industries were at the forefront of the employment surge. Leisure and hospitality led the way, adding 96,000 jobs — significantly more than its monthly average over the past year. Government sectors, health care, professional services, and social assistance also saw substantial growth.
“Looking at construction jobs, non-residential building jobs declined modestly in September, falling 0.02%, while residential building jobs increased by 0.7%. Both were up on an annual basis," First American Deputy Chief Economist Odeta Kushi said.
“Within the construction industry, employment growth was highest for residential building and residential specialty trade contractors. Many have been surprised at the strength of the construction labor market in the face of higher mortgage rates. But builders have benefitted from the lack of re-sale inventory and from their ability to use incentives such as mortgage rate buydowns to entice buyers. Builders have a huge competitive advantage over the re-sale market in this way. And you need more hammers at work to build more homes.”
Despite the overall growth, the transportation and warehousing industry experienced a minor increase in positions, and employment in the information sector saw a slight decline.
“The job market remained quite strong in September. Not only did the pace of job growth pick up, but the unemployment rate remained steady at a quite low 3.8%. Moreover, job growth numbers for the prior two months were also revised much higher," Fratantoni added. “Most of the job growth continues to be concentrated in leisure and hospitality, a sector that is still recovering from the losses incurred during the pandemic."
On the wage front, average hourly earnings for all employees in private nonfarm payrolls went up by 7 cents to $33.88, reflecting a year-on-year increase of 4.2%.
Overall, the employment statistics for July and August underwent positive revisions, suggesting that 119,000 more jobs were added in those months than previously estimated.
