Food Services and Healthcare Job Gains Ease Employment Concerns for Low-Income Consumers

The United States economy added 254,000 jobs in September, exceeding economists’ expectations and potentially mitigating some recent concerns about job prospects among the paycheck-to-paycheck consumer segment.   

The gains in total nonfarm payroll employment also surpassed the average monthly gain over the previous 12 months, which was gauged at 203,000, the Bureau of Labor Statistics (BLS) said in a Friday (Oct. 4) press release. 

Job growth exceeded that of the previous two months, according to the release. There were 159,000 jobs added in August and 144,000 added in July. These figures were revised up Friday from the previously announced 142,000 and 89,000, respectively. 

Economists had expected an addition of 140,000 jobs in September, Reuters reported Friday. 

The job gains — the highest recorded since March — suggest that the Federal Reserve will not need to make large interest rate cuts for the rest of the year to keep the economy resilient, according to the Reuters report. 

President Joe Biden said in a statement released Friday: “Today, we received good news for American workers and families with more than 250,000 new jobs in September and unemployment back down at 4.1%.” 

Biden’s comments were, in part, a reaction to the categories that saw the highest increases. September’s job gains were led by food services and drinking places, which added 69,000 jobs — a total higher than the average monthly gain of 14,000 over the previous 12 months, according to the BLS press release. Other sectors showing employment growth during the month included healthcare (45,000 jobs), government (31,000), social assistance (27,000) and construction (25,000), according to the release. 

Employment during September in other major industries remained the same, the release said. 

The BLS report came two days after payroll solutions firm ADP said that America’s private sector added 143,000 jobs in September after seeing a slowdown in each of the previous five months. ADP found that the biggest job gains came in the leisure and hospitality space (34,000) and construction (26,000). The firm also found that the manufacturing sector added jobs for the first time since April and the information sector was the only sector that shed jobs during the month. 

More job-related anxiety among lower-income consumers came from the Sept. 24 reading by The Conference Board, which showed that the consumer confidence index dropped to a reading of 98.7 this month, down from 105.6 last month. The Board noted that this was the largest decline seen since August of 2021. All five of the consumer confidence index components, spanning the outlook for the economy, inflation and concerns about the job market, deteriorated, the Board said in a Tuesday (Sept. 24) press release. 

The outlook was particularly dour for consumers ages 35 to 54 and earning less than $50,000. 

Overall, consumers see inflation expectations over the next 12 months at 5.2%. And there’s a mixed outlook on spending plans, as “plans for big-ticket appliances were mixed and plans to buy a smartphone or laptop/PC in the next six months eased. However, on a six-month moving average basis, purchasing plans for homes and new cars improved slightly. When asked about plans to buy more goods or services over the next six months, consumers showed a slightly greater preference for purchasing goods,” per the release. The read across here is that the Fed’s most recent rate cuts may spur at least some near-term consideration of opening the proverbial wallets.