(WASHINGTON) — U.S. employers added 263,000 jobs in September and the unemployment rate fell slightly to 3.5% from 3.7%.
Economists were predicting a gain of 250,000 jobs last month.
Notable job gains occurred in leisure and hospitality and in health care, according to the Department of Labor.
The number of long-term unemployed (those who are jobless for 27 weeks or more) was little changed at 1.1 million in September, the department said. The labor force participation rate was 62.3%.
Monthly job growth has averaged 420,000 so far this year versus 562,000 per month in 2021, according to the Department of Labor.
The new jobs data arrives less than two weeks after the Federal Reserve imposed a 0.75% hike in interest rates, the same hike percentage at its previous two meetings.
The Fed has instituted a series of aggressive borrowing cost increases in recent months as it tries to slash near-historic inflation by slowing the economy and choking off demand. But the approach risks tipping the U.S. into an economic downturn and putting millions out of work.
So far this year, however, the U.S. labor market has defied expectations of a slowdown.
U.S. hiring has slowed from its breakneck pace but remained robust in August, with the economy adding 315,000 jobs and the unemployment rate rising to 3.7%.
The hiring marked a significant drop from the 528,000 jobs added over the previous month, suggesting that the Fed’s rate hikes may have begun to cool off the labor market.
“This is an inflection point,” Erica Groshen, an economist at Cornell University, told ABC News. “I expect we’re going to see some signs of loosening in the labor market. Do I think we’re going to drop off a cliff? Probably not.”
Data released this week buttressed predictions of a hiring slowdown.
Job openings plummeted by over 1 million in August, marking a 10% drop from 11.1 million openings recorded in July, according to a government report released on Tuesday.
Meanwhile, unemployment insurance claims jumped by 29,000 to 219,000 in the week ending Oct. 1, Labor Department data on Thursday showed.
After announcing the rate hike last month, Federal Reserve Chair Jerome Powell reasserted the central bank’s commitment to bring inflation down to a target rate of 2%, saying the Fed expects to put forward “ongoing increases” to its benchmark interest rate.
The Fed forecasted that its rate hikes would raise the unemployment rate to 4.4% by the end of 2023.
“I am confident that the labor market won’t be as tight in the coming months,” said Groshen. “The question is how much will the unemployment rate go up and how quickly?”
“This is the pain that the Federal Reserve has reluctantly felt it has to cause,” she added.
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