The US Bureau of Labor Statistics released data on the US labour market last Friday. The report showed that US labour market conditions were relatively robust in September, a swift reversal from weak conditions in the previous three months. Despite the uptick in labour market conditions, the US Federal Reserve Board (Fed) will likely continue to lower interest rates this year. However, the labour report lowered expectations of another outsized rate cut from the Fed.

• The US economy added 254,000 jobs in September, which was the highest number since March 2024. September’s job additions also came in above the 150,000 jobs economists had expected, based on a Bloomberg survey. The number of unemployed persons dropped by 281,000 over the month.
• Considerable job gains were seen in the food services industry. The health care, social assistance and construction industries also posted a sizable number of job gains in September. Conversely, the manufacturing sector, which has been struggling amid lower demand, saw a decline in jobs.
• The US unemployment rate dropped for a second consecutive month, hitting 4.1%. Despite ticking lower in September, it remains at a level higher than in 2022 and 2023.
• How will a better-than-expected labour market report impact the Fed’s upcoming rate decisions? Markets believe the Fed will continue to lower interest rates. However, a robust labour market might keep a rate cut at only 25 basis points (bps), rather than another 50-bps cut as seen in September.

One month does not make a trend, so this will continue to be a key area of the US economy to watch in the months to come and will help guide the Fed’s upcoming decisions. Canada’s labour market report for September will be released on Friday. The Canadian labour market has lost momentum in 2024, which has helped push the unemployment rate to its highest level since October 2021.

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