The Bureau of Labor Statistics (BLS) recently released its employment report, revealing that job creation reached 254,000 in September, significantly exceeding economists' predictions of 150,000 new jobs. The primary drivers of this growth included strong hiring in food services and drinking places (69,000 jobs), health care (45,000), social assistance (27,000), and construction (25,000). Additionally, the job figures for July and August were revised upward by a total of 72,000 jobs.

The unemployment rate also dropped to a three-month low of 4.1%, primarily due to a noticeable decrease in the jobless rate for men aged 20 and over. U.S. wage growth, as measured by average hourly earnings for all private nonfarm payroll employees, rose to 4.0% year-over-year (y/y) in September, up from 3.9% y/y in August.

Construction employment saw a robust increase of 25,000 jobs in September, outpacing the average monthly gain of 19,000 jobs recorded over the previous twelve months. Within the sector, nonresidential specialty trade contractors led the way with an addition of 17,000 jobs, followed by residential specialty trade contractors with 5,800 jobs, and the heavy and civil engineering construction subsector, which added 3,800 jobs. Wage growth in the construction industry also accelerated, rising from 4.4% y/y in August to 4.6% y/y in September. However, the industry’s unemployment rate increased from the record-low 3.2% in August to 3.7% in September.

In light of the recent moderation in the Federal Reserve’s preferred inflation metric—the core personal consumption expenditure deflator—some economists anticipate a potential 50-basis point interest rate cut by the Fed in November. According to Dodge Construction Network, the latest employment report supports a more gradual pace of interest rate reductions by the monetary authority. Dodge forecasts a 25-basis point rate cut during the Fed’s meetings in both November and December, which is expected to help stimulate construction employment and project starts in the short term.