US hiring suggests more big Fed hikes

WASHINGTON, Oct 10, (AP): America’s employers slowed their hiring in September but still added 263,000 jobs, a solid figure that will likely keep the Federal Reserve on pace to keep raising interest rates aggressively to fight persistently high inflation.

Friday’s government report showed that hiring fell from 315,000 in August to the weakest monthly gain since April 2021. The unemployment rate dropped from 3.7% to 3.5%, matching a half-century low.

The Fed is hoping that a slower pace of hiring would eventually mean less pressure on employers to raise pay and pass those costs on to their customers through price increases - a recipe for high inflation. But September’s job growth was likely too robust to satisfy the central bank’s inflation fighters.

Last month, hourly wages rose 5% from a year earlier, the slowest year-over-year pace since December but still hotter than the Fed would want. The proportion of Americans who either have a job or are looking for one slipped slightly, a disappointment for those hoping that more people would enter the labor force and help ease worker shortages and upward pressure on wages.

The jobs report “was still likely too strong to allow (Fed) policymakers much breathing room,” said Matt Peron, director of research at Janus Henderson Investors.

Likewise, Rubeela Farooqi, chief U.S. economist at High Frequency Economics, said she didn’t think September’s softer jobs and wage numbers would stop the Fed from raising its benchmark short-term rate in November by an unusually large three-quarters of a point for a fourth consecutive time - and by an additional halfpoint in December.

On Wall Street, stocks tumbled Friday morning - a sign that investors foresee more aggressive Fed rate hikes ahead. The S&P 500 index sank 1.9% in early trading. And the yield on the 2-year Treasury note, which tends to track expectations for Fed actions, rose to 4.31% from 4.26% late Thursday.