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The United States added 263,000 jobs in September and the unemployment rate returned to the pre-pandemic level

Signage for a job fair on Fifth Avenue in Manhattan, New York, USA.  September 3, 2021. REUTERS/Andrew Kelly/File
Signage for a job fair on Fifth Avenue in Manhattan, New York, USA. September 3, 2021. REUTERS/Andrew Kelly/File

Hiring of new workers in the US economy slowed slightly in Septemberas expected, while the unemployment rate fell back to the same level as in Julyas reported by the Government this Friday.

The data showed that added 263,000 jobs last month, while the unemployment rate fell two tenths of a percentage point, to 3.5%according to the Department of Labor.

The constant slowdown in new jobs is a good news for the Federal Reservewhich works to cool down the economy and curb runaway inflation.

The news did not cause a positive impact on Wall Streetwhere Major indices fell at the open. The S&P 500 lost 1.56%, the Dow Jones was 1.17 in the red and the Nasdaq technology marked -2.3 percent in the first minutes of trading this Friday.

File image of a person walking past a sign offering employment at a hardware store in Cambridge, Massachusetts, USA.  July 8, 2022. REUTERS/Brian Snyder/File
File image of a person walking past a sign offering employment at a hardware store in Cambridge, Massachusetts, USA. July 8, 2022. REUTERS/Brian Snyder/File

With the labor market still tight, wage gains remained strong. Average hourly earnings increased by 0.3% after a similar rise in August. This reduced the annual increase in wages to 5.0% from 5.2% in August.

The Atlanta Fed’s wage tracker, which controls for composition effects such as skill level, occupation and geography, is above the 6%.

The labor market has largely withstood higher borrowing costs and tighter financing conditionsand economists say companies are reluctant to lay off workers following hiring difficulties last year as the COVID-19 pandemic forced some people out of the workforce, in part due to prolonged illness caused by the virus.

While government data this week showed vacancies fell by 1.1 million, the biggest decline since April 2020, to 10.1 million on the last day of August, there are still 4 million more job openings than unemployed Americans. A survey by the Institute of Management and Supply on Wednesday showed that several service industries reported labor shortages in September.

An eagle tops the facade of the United States Federal Reserve Building in Washington, USA.  July 31, 2013. REUTERS/Jonathan Ernst/File
An eagle tops the facade of the United States Federal Reserve Building in Washington, USA. July 31, 2013. REUTERS/Jonathan Ernst/File

However, with the difficulties of higher borrowing costs and slowing demand, economists expect companies to significantly reduce hiring, with negative payrolls likely next year. Economists say companies have been filling vacant positions as they struggled to expand headcount to meet increased demand for their products, fueling job creation.

The Fed raised its policy rate from near zero earlier this year to the current range of 3.00% to 3.25%signaling last month that more big hikes are on the way this year.

Next Thursday’s September consumer price report will also help monetary authorities assess their progress in the battle against inflation ahead of their meeting on November 1-2.

Financial markets have almost priced in a fourth 75 basis point rate hike at that meeting, according to CME’s FedWatch Tool.

(With information from Reuters and AFP)

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