Although hiring by American businesses slowed in September, they still managed to add a respectable 263,000 positions, which is good news that may indicate the Federal Reserve’s efforts to calm the labor market and lower inflation are beginning to bear fruit.
According to the official statistics released on Friday, fewer jobs were added last month than in August (315,00), and the unemployment rate decreased from 3.7% to 3.5%, matching a half-century low.
The Fed, aiming to slow the economy sufficiently to manage the worst inflation in four decades without precipitating a recession, may welcome September’s slightly more modest pace of hiring.
Less pressure on firms to raise wages and pass those costs on to their customers through price rises would result in slower job creation, which would be a formula for high inflation.
The public’s concern over rising costs and the possibility of a recession is also impacting politics as President Joe Biden’s Democratic Party battles to keep control of Congress in the midterm elections in November.
In its titanic fight to control inflation, the Fed has increased its benchmark interest rate five times so far this year. It seeks to restrict economic growth to bring yearly price rises near its 2% target.
It still has a ways to go. The consumer price index, a crucial indicator of inflation year over year, came to 8.3% in August.
The main engine of the American economy, consumer spending, is currently displaying some resiliency.
Consumer spending increased slightly in August compared to July, indicating that the economy was still doing well despite rising borrowing costs, erratic stock market fluctuations, and exorbitant prices for food, rent, and other necessities.