Surprising Job Boom in the USA – Fed Under Pressure

The US economy recorded an impressive job growth in September, significantly surpassing forecasts. The Department of Labor reported the creation of 254,000 new jobs, while experts from Reuters had only anticipated an increase of 140,000. Concurrently, the unemployment rate fell by 0.1 percentage points to 4.1%, supported by a continued low layoff rate. These strong labor market data could have significant implications for the US Federal Reserve, which recently implemented an unusually large interest rate cut of half a percent. Fed Chair Jerome Powell recently expressed concern about the health of the labor market, but now the expectations of another substantial rate cut in November seem to be diminishing. In fact, traders have already started to dismiss the likelihood of another 50 basis point cut at the next Fed meeting. Powell himself tempered this speculation by emphasizing that the central bank is not necessarily in a hurry to further reduce rates quickly. Interest rate futures currently price in quarter-percent rate cuts at upcoming Fed meetings through the first quarter of next year.