Employment rose by 336,000 in September, according to the latest Employment Situation Summary from the U.S. Bureau of Labor Statistics (BLS).
This surge of growth is almost twice as high as economists previously predicted growth of 170,000, according to RedBalloon.
"The job market remained quite strong in September," Mike Fratantoni, Mortgage Bankers Association (MBA) senior vice president, said in a statement. "Not only did the pace of job growth pick up, but the unemployment rate remained steady at a quite low 3.8%.
"Moreover, job growth numbers for the prior two months were also revised much higher," Fratantoni said. "Most of the job growth continues to be concentrated in leisure and hospitality, a sector that is still recovering from the losses incurred during the pandemic."
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The positive growth in the economy is likely to cause the Federal Reserve to continue raising interest rates.
"The U.S. economy added a whopping 336,000 jobs in September, blowing past expectations and giving policymakers at the Fed plenty to think about," Morning Consult Senior Economist Jesse Wheeler said in a statement. "With this report, another rate hike this year is certainly still on the table."
The Fed paused interest rate hikes at its latest Federal Open Markets Committee (FOMC) meeting in September. This left the federal funds rate at its 22-year high and followed 11 previous rate hikes in 2022 and 2023.
"Inflation remains well above our longer-run goal of 2%," Fed Chair Jerome Powell said at a press conference following the meeting. "We're prepared to raise rates further if appropriate, and we intend to hold policy at a restrictive level until we're confident that inflation is moving down sustainably toward our objectives."
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As the Fed moves the federal funds rate higher, mortgage rates could soon follow. As mortgage rates rise, it could make the housing market less affordable and further slow the housing market.
"This report certainly surprised the market, which had been expecting a slowdown and longer-term rates jumped in response," Fratantoni said. "Mortgage rates will follow which will likely mean that lending activity, which was already at a multi-decade low, is not going to pick up anytime soon."
This week, mortgage rates rose above 7%, and Freddie Mac predicted they will likely continue to rise as long as economic indicators remain resilient.
"Mortgage rates maintained their upward trajectory as the 10-year Treasury yield, a key benchmark, climbed," Freddie Mac's Chief Economist Sam Khater said. "Several factors, including shifts in inflation, the job market and uncertainty around the Federal Reserve's next move, are contributing to the highest mortgage rates in a generation. Unsurprisingly, this is pulling back homebuyer demand."
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