A ‘Soft Landing’ To Avoid A Recession

Data comes as the central bank seeks to guide the US economy to a ‘soft landing’ to avoid a recession



The US workforce added 336,000 jobs last month, much more than expected, as the world’s largest economy remained resilient in the face of higher interest rates.

The sharp acceleration in hiring saw non-farm payrolls rise during September by almost twice as much as economists had anticipated. Readings for July and August were also revised higher, with 236,000 and 227,000 jobs added, respectively.

Employment growth had been fading in recent months, according to official data, but remained largely resilient while the Federal Reserve battled to get inflation under control. This bolstered hopes that the central bank will manage to guide the US economy to a so-called “soft landing”, where price growth normalizes and recession is avoided.

The headline unemployment rate held firm at 3.8% last month. The leisure and hospitality sectors helped drive the jump in payroll growth, adding 96,000 jobs. Government employers also added 73,000 jobs.

The news comes as policymakers at the Fed prepare to meet on Halloween for their latest rate-setting meeting. They are expected to hold rates steady. When officials convened last month, documents released by the central bank revealed that they on average expected unemployment would rise to 4.1% next year, down from a median projection of 4.5% earlier this year.

The latest report “suggests the labor market is enjoying a soft landing”, Paul Ashworth, chief North American economist at Capital Economics, said. “The surprisingly strong 336,000 increase in non-farm payrolls in September adds to the evidence on real activity that the economy is holding up well despite the headwind from higher interest rates.”

Wall Street came under pressure following the release, with the S&P 500 down almost 1% during pre-market trading, as investors considered whether the Fed would raise rates further in the months ahead.

Jerome Powell, the central bank’s chair, has described a “soft landing” as plausible, but not his baseline expectation. He said factors outside the Fed’s control, such as the autoworker strike and the threat of a government shutdown, could knock the US economy.