Washington (AFP) - US job gains slowed slightly in September, offering some good news for the Federal Reserve as it works to cool the economy, but official data released on Friday also showed wages continued to rise, underlining the challenge to tamping down rampant inflation.
President Joe Biden, who has seen his approval erode in the face of surging prices, cheered the data as a sign of "historic progress" in the economy, even while he said there is more work to do to help American families.
But the central bank likely will want to see more evidence of slowing price increases, which have soared at the fastest pace in 40 years, before pulling back on its aggressive interest rate increases.And economists say another big hike remains likely next month.
The economy added 263,000 jobs last month, showing a steady slowdown from the blistering pace in 2020 and 2021, the Labor Department said in the closely-watched report.The unemployment rate slipped two-tenths of a percentage point to 3.5 percent.
Biden said the gain brings the total jobs created since he took office in January 2021 to 10 million.
"Our job market continues to show resilience as we navigate through this economic transition we're in," he said in a speech at a Volvo plant in Hagerstown, Maryland.
Following the rapid turnaround from the worst of the pandemic, "we have to move from historically strong economic recovery to a more steady, stable recovery," Biden said.
Wages still rising
But he stressed, "We need to bring inflation down without giving up all the historic economic progress that working class and middle class people have made."
While the US president cheered the increase in wages caused by the strong labor market, that is of more concern for the Fed.
The report showed a 10-cent increase in average hourly earnings in the month to $32.46. Over the past 12 months, average hourly earnings have increased by 5.0 percent, still high but a slowing from the pace seen over the past year.
The central bankers are watching closely to see if wages continue to accelerate, which would fuel further inflationary pressures.
The Fed has raised the benchmark lending rate five times this year and said more tightening will be needed to get inflation down, but it acknowledges that the process could cause a painful economic slowdown.
"A moderation in job and wage growth will be welcome developments for Fed officials.However, these data do not change the near-term course of monetary policy," Rubeela Farooqi of High Frequency Economics said in an analysis.
Fed officials in recent comments have made it clear that no single data report will change their trajectory since it will take time for inflation to get back down to the two percent goal, which will require more rate hikes.
Worker shortage?
Robert Frick, corporate economist with Navy Federal Credit Union, called the September data "a Goldilocks jobs report."
He said it was "cool enough to make the Fed happy that the 'tight' labor market is loosening, and warm enough to satisfy most Americans looking for work, or looking to switch jobs for higher pay."
Jason Furman, a former White House economist, said only two "surprisingly low" inflation reports before the November 1-2 policy meeting could cause the Fed to pivot its stance.
"And while economic forecasting can be difficult, I'm reasonably confident the chances of that happening are precisely 0%," Furman tweeted.
US employers continue to complain that they have difficulty filling open positions, and the Fed wants to see signs of an easing in the tight labor market.
The data showed notable gains in the leisure and hospitality sector and in health care, and a decline in government jobs.
The unemployment rate, which edged up in August as more workers came off the sidelines to join the labor force, slipped back last month, and the participation rate was barely changed at 62.3 percent as the pool of available workers was about steady.
Hurricane Ian, which caused massive devastation, especially in Florida, "had no discernible effect" on the data, which was collected before the storm made landfall.
