(Updated with details, market reaction)
by Lucia Mutikani
WASHINGTON, Oct 7 (Reuters) – The U.S. economy added more jobs than expected in September and the jobless rate fell to 3.5%, which should give the Federal Reserve confidence in a rapid rate hike.
The Department of Labor announced Friday 263,000 job creations last month after 315,000 in August.
Economists polled by Reuters on average predicted a sharper slowdown to 250,000 job creations for September, with estimates ranging from 127,000 to 375,000.
The Reuters consensus gave the unemployment rate at 3.7%, the same as the previous month.
Average hourly earnings rose 0.3% after a similar rise in August, bringing its increase to 5.0% on one, from +5.2% in August.
After the release of these figures, the dollar turned higher against a basket of benchmark currencies while futures contracts on Wall Street indices and European stock markets retreated.
The job market has largely resisted the Fed’s rate hike and tighter financial conditions, with economists saying entrepreneurs are reluctant to lay off workers after struggling to recruit last year. last.
While official data this week showed that job vacancies fell by 1.1 million – the biggest drop since April 2020 – to 10.1 million at the end of August, there are still four million vacancies from more than unemployed.
However, given rising borrowing costs and slowing demand, economists expect companies to cut hiring significantly.
The Fed raised the federal funds rate target two weeks ago to 3.00%-3.25%, its highest level since 2008, and signaled that further sharp rate hikes should be decided upon. end of the year.
Next Thursday’s release of the September consumer price index will allow central bankers to assess progress in tackling inflation ahead of the November meeting.
Fed funds rate futures now reflect a 90% chance of a three-quarter point hike in the fed funds rate next month, up from 85% before the jobs report was released. (Written by Laetitia Volga, edited by Sophie Louet)