---
title: "Non-farm payrolls surged by 254,000 more than expected + Unemployment rate unexpectedly fell, has the US economy successfully achieved a \"soft landing\"?"
type: "News"
locale: "en"
url: "https://longbridge.com/en/news/215969519.md"
description: "In September, the non-farm payrolls in the United States increased by 254,000, exceeding economists' expectations, and the unemployment rate unexpectedly dropped to 4.1%. Accelerated wage growth has alleviated concerns about economic recession, demonstrating that the U.S. economy has successfully achieved a \"soft landing\". The financial markets have cooled on expectations of a Fed rate cut, indicating that the employment market and the overall economy are still growing steadily. The resilience of consumer spending will drive further development of the U.S. economy"
datetime: "2024-10-04T13:59:02.000Z"
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  - [en](https://longbridge.com/en/news/215969519.md)
  - [zh-HK](https://longbridge.com/zh-HK/news/215969519.md)
---

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# Non-farm payrolls surged by 254,000 more than expected + Unemployment rate unexpectedly fell, has the US economy successfully achieved a "soft landing"?

According to the latest statistics obtained by Zhitong Finance and Economics APP, last month's US non-farm employment figures exceeded all economists' expectations, while the unemployment rate unexpectedly decreased and wage growth accelerated unexpectedly. Although it calmed people's negative concerns about the labor market deteriorating significantly and leading to a recession in the US economy, financial markets significantly cooled their expectations for a rate cut by the Federal Reserve before the end of this year. Following the release of this non-farm data, some economists believe that the US economy has achieved the long-awaited "soft landing" by Federal Reserve officials - that is, successfully lowering the inflation rate through an aggressive rate hike cycle while the job market and overall economy continue to grow steadily. The "soft landing" of the US economy is undoubtedly a positive catalyst for global financial markets.

The latest statistics show that following the unexpected upward revisions of 72,000 non-farm employment figures in the previous two months, non-farm employment in September saw a significant unexpected increase of 254,000, marking the largest increase in non-farm additions in six months. In comparison, economists' median expectation was only 150,000, and the latest non-farm figure exceeded even the most optimistic expectations shown in media surveys. According to another data released by the US Bureau of Labor Statistics on Friday, the unemployment rate unexpectedly dropped to 4.1%, and hourly earnings grew by 0.4% month-on-month, both figures surpassing economists' expectations (unemployment rate expectation was 4.2% and hourly wage growth rate was 0.3%).

Combining with the data released earlier this week, it is evident that US companies still have a healthy demand for workers, and the number of layoffs remains very low. The employment report is likely to significantly alleviate economists' concerns about the labor market in the US cooling too quickly and the fear of an economic recession. The situation in the US labor market is closely related to US consumer spending, as the scale of employment and wage income are crucial for overall consumption. Consumer spending resilience will undoubtedly continue to drive the US economic juggernaut forward, as 70%-80% of the components of the US GDP are closely related to consumption.

The latest non-farm employment data also shows that due to potential reasons such as personal economic improvement, the number of Americans working part-time unexpectedly decreased, and recently unemployed individuals were able to quickly find work elsewhere.

Looking ahead to the future of the US economy, after the Federal Reserve cut interest rates by 50 basis points to kick off a rate-cutting cycle, combined with the recent incredibly strong non-farm figures and continuously better-than-expected initial jobless claims, some economists believe that the US economy has successfully achieved a "soft landing," or is very close to it

## Expectations for a 50 basis point rate cut have significantly cooled

For the stock market, such strong employment data may not be what investors generally hope to see. After all, stronger-than-expected employment data may significantly increase the possibility of Federal Reserve policymakers lowering interest rates by 25 basis points next month, or even choosing to pause rate cuts. Previously, they made a larger rate cut at the September meeting - a surprise 50 basis point cut that marked the beginning of the rate cut cycle.

Federal Reserve Chairman Jerome Powell reiterated this week that protecting the U.S. labor market was part of the reason the Fed launched a looser monetary policy with a larger rate cut in September. The Fed hopes to combat inflation without harming the trend of labor market growth. He also emphasized this week that his Fed colleagues believe that further cooling of the labor market is not necessary to bring inflation down to the Fed's 2% target.

Powell has recently made multiple statements that Fed officials are not seeking or welcoming further cooling of the labor market. Powell and other Fed officials have hinted in various ways recently that the Fed's main task in the future is to avoid an economic recession and ensure a "soft landing" for the U.S. economy.

The latest non-farm payroll data shows that the increase in hiring last month was mainly driven by the leisure and hospitality industry, as well as the healthcare and government sectors. The employment diffusion index, which measures the breadth of changes in private employment, rose to its highest level since the beginning of the year. However, manufacturers have been laying off workers for the second consecutive month.

After the data was released, U.S. stock index futures, the U.S. dollar, and bond yields unexpectedly rose. Prior to the data release, strategists at Bank of America and J.P. Morgan both indicated that stronger-than-expected non-farm payrolls could lead to a decline in U.S. stocks.

The latest pricing in the derivatives market shows that traders are generally betting that the Fed will announce a 25 basis point rate cut in November, rather than the previously expected 50 basis points. The CME "FedWatch Tool" shows that futures traders have mostly shifted to betting on a 25 basis point rate cut after the release of the stronger-than-expected non-farm payroll data. The latest CME statistics show that the probability of a 25 basis point rate cut by the Fed in November is over 90%, up from around 50%-60% before the non-farm payroll release.

Fed officials are also closely monitoring the pace of wage growth, as it can help the market understand expectations for consumer spending. Consumer spending is the most core engine of the U.S. economy, and there is no other like it. Stable wage growth that does not stimulate inflation is what officials are eager to see.

The latest hourly wage income increased by 4% compared to the same period last year, the largest increase in four months. However, wage growth for production and non-supervisory workers unexpectedly cooled to 3.9%. Overall, the wage data is in line with expectations and aligns with the Fed officials' tone of wage growth not stimulating inflation rebound.

## Unemployment rate unexpectedly drops for the first time in nearly a year

The non-farm employment report released in October includes the negative impact of approximately 33,000 factory workers at Boeing going on strike last month. Another large-scale strike by U.S. dockworkers ended three days later and may not have a direct and immediate impact on the employment numbers for that monthHowever, another issue affecting employment is Hurricane Helen, which has caused casualties and massive economic damage in large areas of the southeastern United States. Some areas in the region are working hard to reopen roads and restore electricity, indicating that commercial recovery still takes time.

The latest non-farm employment report data also shows that the so-called underemployment rate - including those who work part-time for economic reasons and workers who have lost their employment willingness - unexpectedly dropped to 7.7% in September, the first decline in this statistic in nearly a year.

The latest labor participation rate (the proportion of the population working or seeking work) has remained around 62.7% for three consecutive months. The participation rate for the 25-54 age group (also known as the prime working-age population) unexpectedly dropped to 83.8%.

While layoffs are not the core feature of the cooling labor market in the United States, layoffs in other countries are intensifying. Samsung Electronics is laying off employees in Southeast Asia and Oceania as part of its global layoff plan. Volkswagen is making significant layoffs in the Asian region and considering closing factories in Germany.

## The "soft landing" that Federal Reserve officials have been longing for may have really been achieved

In terms of economic data, the latest released non-farm employment data exceeding expectations, a lower-than-expected unemployment rate, and a higher-than-expected upward revision of long-term GDP growth, coupled with the basic conformity of initial jobless claims in recent weeks and a cooling trend, along with the crucial service sector in the United States continuing to show PMI expansion momentum exceeding expectations, and with inflation continuing to decline, perfectly align with the "soft landing" scenario for the U.S. economy that Federal Reserve officials have been yearning for. Therefore, some economists are shouting that the U.S. economy has successfully achieved a "soft landing."

After the pandemic caused a sudden downturn in the U.S. economy leading to a brief economic recession, even after experiencing high inflation and the Federal Reserve's aggressive rate hike process, raising the U.S. benchmark interest rate to 5.25%-5.5%, the highest level in over 20 years, the U.S. economy rebounded quite strongly. The comprehensive annual update from the U.S. Bureau of Economic Analysis shows that from the second quarter of 2020 to the end of 2023, the average inflation-adjusted annual GDP growth rate for the United States is 5.5%. Compared to the previously announced 5.1% increase, the revised number is significantly more optimistic.

The U.S. Bureau of Economic Analysis has revised the U.S. economic growth rate for the entire last year from 2.5% to 2.9%, although the adjustments are concentrated in the first half of the year.

The real GDP growth in the United States in 2022 was 2.5%, which is 0.6 percentage points higher than the previously announced data. In addition, the latest data shows that in that year, only the first quarter saw a decline in GDP at an annualized rate, rather than the technical economic recession indicated by the initial GDP data report of two consecutive quarters of decline.

![image.png](https://imageproxy.pbkrs.com/https://img.zhitongcaijing.com/image/20241004/1728049538540159.png?x-oss-process=image/auto-orient,1/interlace,1/resize,w_1440,h_1440/quality,q_95/format,jpg)The final revised data from the government still shows an upward revision in the 2023 U.S. Gross Domestic Income (GDI), which is the income and cost generated from the production of goods and services. The inflation-adjusted growth rate of last year's GDI has increased significantly from 0.4% to 1.7%.

The incredibly strong rebound trend of the U.S. economy in recent years fully reflects the epic stimulus effect brought about by trillions of dollars in fiscal spending and the comprehensive quantitative easing by the Federal Reserve in the period after the pandemic.

Overall, the unparalleled bottoming-out rebound process of the U.S. economy since the second quarter of 2020 is one of the strongest economic expansion cycles in the U.S. economy since World War II.

"We believe that the 'soft landing' situation of the U.S. economy has become very clear, but it may be too early to conclude that the unexpected 50 basis point rate cut by the Federal Reserve in September has completely stabilized the labor market. It is more likely that the Fed's next rate cut will follow the normal pace of a 25 basis point cut in November," said Bloomberg Economics economists Anna Wong, Stuart Paul, Eliza Winger, and Estelle Ou.

Senior economist Laura Rosner-Warburton from MacroPolicy Perspectives stated after the September non-farm payroll report: "Given this employment report, the Federal Reserve is more likely to make the correct monetary policy decisions and will not lag behind the curve as the market expects." She also pointed out that these data significantly reduced the possibility of another half-point rate cut

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