Wage Growth Slows in September Despite Robust Job Gains, Cooling Inflation Fears and Lifting Stocks

Despite a strong September jobs report, wage growth was slower than expected, cooling fears of runaway inflation. This led stocks to recover intraday after an initial drop.

Wage growth of just 0.2% in September supports the view that the Fed may not need to raise rates further to contain inflation.

Economists focused on slowing wage growth as a sign of a soft landing, while bond investors reacted more to high job openings.

Inflation reports in October, especially the PCE price index, will be pivotal in determining if the Fed raises rates again at its November meeting.

While job growth remains robust, other economic weaknesses globally may limit inflation through 2024, though risks remain if the Fed overtightens.