Jobs report shock: American economy added a stunning 336,000 jobs in September

The S&P 500 logged its biggest one-day gain on Friday to cap off a turbulent trading day, after the latest jobs report revealed a surge in hiring last month.

The S&P 500 and Nasdaq Composite gained for the week, while the Dow fell. Still, all three major indexes are up for the year.

The US economy added 336,000 jobs last month, above economists' expectations of 170,000 jobs.

Stocks initially sold off on the news, but staged a midday rally as investors continued to parse the data.

"Markets are recovering from this morning’s swoon as investors choose to focus on the positive areas within the payroll report," José Torres, senior economist at Interactive Brokers, wrote in a Friday note.

Average hourly earnings rose by 0.2% last month from August, below last year's 4.2% increases. That's below economists' expectations of a monthly increase of 0.3% and annual uptick of 4.3%, according to Refinitiv.

Treasury yields also retreated from multi-year highs, easing the pressure on stocks.

The Consumer Price Index and Producer Price Index inflation reports are set for release next week, and that data could be crucial for the Federal Reserve in deciding whether to pause or hike interest rates at its next policy meeting, which concludes November 1.

Friday's jobs report did little to sway Wall Street's opinion on what decision the Fed will make: Markets see a roughly 71% chance that the Fed holds rates steady at its next meeting, according to the CME FedWatch Tool.

The Dow rose 288 points, or 0.9%.

The S&P 500 gained 1.2%.

The Nasdaq Composite added 1.6%.

As stocks settle after the trading day, levels might change slightly.

From actors to autoworkers, more than 450,000 workers have participated in 312 strikes in the United States this year, according to Cornell University’s Labor Action Tracker. 

Are all of these workers missing from the US government’s monthly jobs reports?

The report produced by the Bureau of Labor Statistics is a product of two different surveys. 

One asks a sample group of employers to report how many workers they employed, based on their payroll records for the pay period that includes the 12th of the month. Data from that survey is used to determine how many people were hired or laid off in a given month. 

“If the striking workers earned pay for any part of the reference period, even one hour, they are counted as employed,” Cody Parkinson, an economist at the BLS, told CNN. “Striking workers are reflected as a subtraction from the employment level in the first monthly estimate when they are not working in the reference pay period. They are added back only when they return to work.”

That means that in the September jobs report, United Auto Workers members on strike are counted as employed since the strike began on September 15, which was during the reference week. But if the strike continues through the end of next week they will not be counted as employed in the October jobs report due next month unless they are on the payroll of a different employer.

In contrast, the impact of the SAG-AFTRA strike, which began in July, showed up in some of the data that was included in the September jobs report.

“Employment in motion picture and sound recording industries continued to trend down (-7,000) and has declined by 45,000 since May, reflecting the impact of labor disputes,” the BLS noted in the September jobs report. 

In the case of the Writers Guild of America strike, which recently ended, many of the union members were contract workers or freelancers. So you wouldn’t be able to see the impact of strikes simply by looking at industry hiring data that comes from payroll data. 

However, there’s another survey used to construct the monthly jobs report that asks individuals if they worked in a given week. Data from that survey is used to calculate the unemployment rate. Since the survey captures almost all types of working arrangements, contractors and freelancers on strike would impact the data. 

The BLS classifies someone as unemployed “if they were not working but were available to work and actively looked for work in the prior 4 weeks.” 

If the answer to that is no, they aren’t considered part of the labor force even if they are part of a striking union. 

If someone was on strike but earned money working a different way, like driving for Uber, during the reference period, they’d be counted as employed. 

Finally, “a worker who was on strike for the entire reference period and did not have a job would be counted as employed but not at work due to a labor dispute,” Parkinson said.

US stocks climbed Friday afternoon, with all three major indexes on track to gain for the week.

After starting the day lower, the Dow climbed 412 points, or 1.3%, by early afternoon and is on pace for its largest one-day gain since June.

The S&P 500 added 1.5% and the Nasdaq Composite rose 1.7%.

President Joe Biden summed up the stronger-than-expected jobs report in three words on Friday. 

"Good news today," Biden said as he approached the podium in the White House Press Room. 

He touted the stronger-than-expected September jobs report that showed hiring accelerated by 336,000 jobs last month. When noting an unemployment rate that has remained below 4% for 20 months in a row and labor force gains made by women, minorities and marginalized workers, Biden attributed the strength to his administration's "Bidenomics" efforts.

"It's no accident, it's Bidenomics, we're growing the economy from the middle out, the bottom up and not the top down," Biden said during a press conference. "And inflation's coming down at the same time."

Biden specifically highlighted the employment growth in manufacturing, which added 17,000 jobs last month.

As of September, there were more than 13 million jobs in the manufacturing sector, BLS data shows. About 815,000 of those jobs were created since he took office, Biden said.  

"My economic plan is bringing supply chains home and investing in industries of the future so we can make things in America again with American workers," he said. 

Some key labor force metrics held steady during September: Average workweek hours were unchanged at 34.4 hours, indicating that employers were not cutting back on hours, and the overall labor force participation rate didn't budge from 62.8%.

However, there was a slight step back in the labor force participation rate for women in their prime working age of 25 to 54 years old, the report showed. After setting an all-time high in June at 77.8%, that rate is now 77.4%, dropping 0.2 percentage points from August. 

"In future months, we are watching this number closely as expiring federal child care funding could sideline working mothers," Daniel Zhao, Glassdoor's lead economist, wrote in commentary issued Friday.

The federal pandemic-era child care stabilization grant program ended on September 30. 

The historic federal investment, which was part of the $1.9 trillion American Rescue Plan Act that Democrats passed in March 2021, supported more than 220,000 child care programs, affecting as many as 9.6 million children, according to the federal Administration for Children and Families.

Nationwide, more than 70,000 child care programs are projected to close, and about 3.2 million children could lose their spots due to the end of the child care stabilization grant program on September 30, according to an analysis by The Century Foundation.

— CNN's Tami Luhby contributed to this report.

Restaurant employment hit a milestone in September, exceeding pre-pandemic levels for the first time. 

Restaurants, bars and other food service outlets added a net 60,700 jobs in September, adjusted for seasonal swings, the Bureau of Labor Statistics reported Friday. 

That puts restaurant jobs at roughly 30,000 above the February 2020 number, noted the National Restaurant Association, which has been tracking the numbers using data from the BLS. 

When bars and restaurants closed their doors in March 2020, many restaurant workers lost their jobs. When eateries reopened, some of them stayed away. 

Though the restaurant industry has largely bounced back, the landscape has shifted, with many restaurants focusing on pickup or delivery options, and some large chains experimenting with robots or AI that reduce their reliance on employees.

Data shows that there were fewer restaurants in 2022 than in 2019, and experts think that shrink may be permanent. 

Still, there is a need for more workers. According to the BLS’s most recent data on job openings, there were about 1.2 million openings in the accommodation and food services sector in August. 

JPMorgan Chase's chief US economist said Friday that the hotter-than-expected jobs report is unlikely to change the Federal Reserve's expected decision to pause interest rates in November.

But data showing a surprise increase in inflation could be what drives the central bank to raise rates, he added.

"If that happens, the already tenuous case for avoiding recession next year gets harder to make," wrote Michael Feroli, JPMorgan Chase's chief economist, in a note on Friday.

Markets see a roughly 68% chance that the Fed pauses rates in November, according to the CME FedWatch Tool. For December, the tool shows a 58% expectation of another pause.

The Producer Price Index and Consumer Price Index, two closely watched inflation gauges, are set to be released on Wednesday and Thursday, respectively, next week.

All three major indexes turned positive late Friday morning as Treasury yields retreated from multi-year highs.

The Dow rose 308 points, or 0.9%. The S&P 500 gained 1% and the Nasdaq Composite rose 1.2%.

The 10-year Treasury yield edged lower to 4.769% after soaring to 4.858% following the hotter-than-expected jobs report, its highest level since 2007.

Still, the Dow and S&P 500 are on track for a losing week, after a surge in Treasury yields to their highest level in over a decade sent stocks tumbling earlier in the week. The Nasdaq Composite is on track to eke out a gain for the week.

Earlier this week, payroll processor ADP reported US private employers added 89,000 jobs in September. Meanwhile, on Friday, the Bureau of Labor Statistics reported 336,000 job gains.

Even with the 96,000 government job gains the BLS reported were added last month that aren't captured in ADP's data, there's a sizable discrepancy between the two reports.

What gives?

ADP and the BLS produce different monthly estimates of how many jobs employers fill each month in part because they rely on different sources of data.

ADP, the nation’s largest private payroll processor, produces its monthly National Employment Report by analyzing internal payroll data that covers more than 25 million employees to determine how many new people were hired.

However, the BLS surveys about 122,000 employers, representing approximately a third of all nonfarm payroll jobs in the United States. Every month they ask the sample group of employers to report how many workers they employed, based on their payroll records for the pay period that includes the 12th of the month. Those responses are used to estimate total nonfarm employment in the country.

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