Washington: US employers stepped up their hiring pace unexpectedly in September while unemployment held steady, government data showed on Friday, adding pressure on policymakers seeking to cool the economy.
The US economy added 336,000 jobs last month in the highest surge since January, and the jobless rate was unchanged at 3.8 percent, said the Labor Department.
This adds to signals that the American job market remains robust despite efforts by the central bank to cool the world's biggest economy and lower inflation sustainably.
When the Federal Reserve lifts interest rates and borrowing costs rise, this can dampen hiring associated with business expansion and the jobless rate is generally expected to tick up.
But for now, the pace of hiring hovers above pre-pandemic levels and unemployment is still around a historically low level, meaning that Fed officials could consider further policy action.
- Caution ahead -
Analysts, however, have warned that the job market could weaken going forward as it takes time for existing policy changes to ripple through the economy.
In September, sectors that saw job gains included leisure and hospitality, government as well as health care, said the Labor Department.
An area contributing to the increase was education with the government sector adding 73,000 jobs -- mainly teachers for the new school year -- noted EY chief economist Gregory Daco.
But despite the blowout jobs report, he does not rule out the possibility that hiring will decline later this year.
Financial conditions are tightening, Daco said, adding: "The auto union workers strike will weigh on job growth in October while easing consumer spending and more cautious business activity will lead to slower labor demand."
Economist Oren Klachkin of Nationwide Economics told AFP he does not expect the current trend to continue either.
"The economy might be resistant to high interest rates and tighter lending standards today, but it isn't immune," he said.
- Wage growth cooling -
Apart from the overall acceleration in employment, hiring figures for August and July were revised upwards by 119,000 combined, the Labor Department said on Friday.
Average hourly earnings rose 0.2 percent, the same rate as in August.
The pick-up in employment is expected to support incomes, and this will likely be of concern to Fed officials as it could feed into consumer demand and inflation.
But wage growth is moderating on an annual basis, providing some relief to policymakers.
Economist Rubeela Farooqi of High Frequency Economics noted the annual change in earnings was a 4.2 percent increase -- the smallest gain since June 2021.
"A slowing in wage pressures will be welcome news," she said.
Currently, her expectation remains that there will not be further interest rate hikes this year.
If the labor market continues to strengthen, however, she cautioned that this would keep the Fed open to raising rates further in 2023.
Economist Nancy Vanden Houten of Oxford Economics added that even as the Fed is expected to "proceed cautiously," a strong consumer inflation reading next week could also "tip the scales in favor of a rate hike" in the central bank's November meeting.