US job growth accelerates again – Commerzbank

After the disappointing data of late, the US labor market situation improved significantly again in September. At the same time, the unemployment rate fell to 4.1%. Of course, individual monthly figures should not be overstated. But this report should ease concerns that the US economy is on the brink of recession, notes Dr. Christoph Balz, chief economist at Commerzbank.

The US economy to avoid a recession

“After several disappointing employment reports, the data for September was surprisingly favorable. The number of jobs rose sharply, and revisions to the data showed that the situation in previous months was better than feared. All sectors expanded except manufacturing and transportation. At the same time, the unemployment rate fell, with even the broadest measure of underemployment, which includes involuntary part-time workers among others, falling from 7.9 percent to 7.7 percent. In addition, wages rose more strongly again, with August’s increase also revised upwards. The only downside is that employees worked shorter hours on average.”

“The employment figures are based on a sample of selected companies rather than a full survey of all companies. Therefore, they can fluctuate sharply from one month to the next. Consequently, individual monthly values ​​should not be over-interpreted. Just as the last reports probably presented the situation as too bad, today’s numbers may be “too good”. The six-month average is likely to be more significant. It continues to show a slight weakening. However, there is no sign of an imminent decline. Rather, strong labor force growth and wage growth suggest that private consumption will continue to support GDP growth. We continue to expect the US economy to avoid a recession.”

“After cutting rates by 50 basis points in September, the question now is whether the US Federal Reserve will maintain this pace in November or if there will be ‘only’ a 25 basis point move. The labor market will likely play a decisive role here, as the Fed does not want to see further easing here. However, there is little sign of such a slowdown in today’s numbers. Today’s report rather supports our forecast of a “small” step. However, another employment report will be released before the next meeting, along with consumer prices and quarterly employment costs.”