Following a slew of worrying labor market data published earlier this summer, today’s jobs report from the Bureau of Labor Statistics is like a breath of fresh air.
US employers added 254,000 jobs in September, a 95,000 increase from August, marking the largest month-over-month jump since last December when 108,000 more jobs were added. Companies also added more jobs than initially reported in July and August, revising the numbers to 144,000 and 159,000 respectively. The unemployment rate fell to 4.1% last month from 4.2% in August.
“I was pleasantly surprised,” Rajesh Namboothiry, SVP with Manpower US, told HR Brew. “We were expecting the trend to be [a] modest improvement month over month. But this is a strong report.”
A September surge? Employers, particularly those that need to bulk up their workforces for the holiday season, tend to start ramping up hiring in the autumn. It’s a phenomenon known as the “September surge.”
“This is a strong month for pre-holiday hiring,” Namboothiry said. “As employers start to gear up for [the] holiday season, you would expect to see some of the surge.”
Certain seasonal industries saw particularly high spikes in job growth. Employment in food services rose by 69,000 in September, a significant spike from the averaged 14,000 monthly gain added over the previous 12 months. Construction added 25,000 more jobs last month, up from the monthly average of 19,000 from the prior year. The healthcare sector also added 45,000 jobs more last month, though these gains were less than the 57,000 average employment added monthly in the past year.
But the spike in hiring could also be attributed to employers in white collar industries overcorrecting for layoffs earlier this year, Kate Duchene, CEO of consulting firm RGP, told HR Brew. For example, the professional and business services industry saw the highest monthly increase in layoffs in August, but also saw the fifth-highest increase in jobs added in September for non-government sectors, adding 17,000 roles.
“We saw layoffs in this sector in June and July and even a little bit into August. What we generally see after that is that they determine they cut too deep, some of the non-discretionary work still has to happen, so you see rebounds,” Duchene said. “These kinds of cycles where you get fluctuations are understandable.”
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Zoom out. September’s surprisingly strong numbers also came ahead of the anticipated business impacts from the US Federal Reserve Bank’s interest rate cuts in mid-September. According to a recent pulse survey from RGP of 204 financial decision-makers at large companies, nearly two-thirds surveyed (62%) expect some increased investment from the rate cuts to start permeating through their organizations later in 2024, or in the first half of 2025, while a further 19% surveyed expect some increased investment immediately. As such, companies will likely start hiring soon as part of these unlocked business investments.
“Get ready for movement, because I think we’ve been really conservative in terms of job hopping the last six months, and that will pick up,” Duchene said.
In addition to anticipating an increase in workers job-hopping, HR and recruiting leaders will want to focus on their hiring strategy over the next six to nine months and finding pathways for upskilling existing talent, Namboothiry said. The US continues to face a skills shortage that will only get worse in the coming years, and companies cannot continue to rely on sourcing needed talent solely through recruiting.
“As employers are looking at planning for 2025, their transformation roadmap, they should start to think about the roles of the future,” Namboothiry said. “They should start to think about those niche roles, skilled, technical roles. Those are hard to find. We are still struggling to find the right level of talent pool, so starting to think about that, starting to plan for that, would be important.”
Correction 10/15/2024: This piece has been updated to add that according to the RGP of 204 financial decision-makers at large companies, 19% expect an immediate change in investment following rate cuts.