Global payroll growth highest for over three years amid broadening hiring upturn

Worldwide PMI survey data indicated accelerating jobs growth in September, with firms encouraged back to the la-bour market amid reduced uncertainty about the business outlook compared to earlier in the year. Globally, job gains were the highest since May 2023, with the sectors distribution of jobs growth also broadening out to the widest for over two years.

The employment situation varied markedly regionally, however, with strong job gains reported in the US alongside robust increases also seen in India and Japan. More modest but improving employment situations were meanwhile seen in the eurozone and Mainland China, but jobs were cut in the UK, Australia, Canada, Russia and Brazil.

Reduced uncertainty unlocks hiring

Employment growth rose markedly at the global level in September, according to PMI data compiled by S&P Global with J.P. Morgan. The global PMI’s Employment Index rose to its highest since May 2023, signalling net job gains for a third successive month, with the rate of job creation having accelerated throughout this period. This contrasts with the largely stalled or falling employment seen in the first six months of the year.

The recent job gains are helping to narrow an unusual gap with backlogs of work, which have risen sharply over the past year. While rising backlogs of uncompleted orders would typically have encouraged job creation over this period, employers have shown a reluctance to hire amid subdued business confidence and elevated levels of uncertainty, often linked to geopolitical events such as US tariffs and the war in the Middle East. However, recent months have seen uncertainty moderate globally. Having spiked higher earlier in the year, reports of “uncertainty” dampening business optimism or order books have fallen to their lowest since February, just prior to the outbreak of war in the Middle East.

Jobs growth highest since 2023

The survey data therefore indicate that reduced uncertainty is encouraging employers to play catch-up with the growing demand seen over the past few months. The past two months have consequently seen the strongest glob-al job gains since the second quarter of 2023.

Manufacturing payrolls rose worldwide at a pace not seen since May 2022, while service sector payroll growth hit its highest since June 2023.

Broadening sectoral jobs growth

More specifically, the labour market improvement was led by technology firms, which have taken on extra workers at a rate not seen for over two years in recent months. Moreover, September marked the first time in over three years that all eight major industries reported higher employment.

Moreover, although some sub-sectors – notably construction materials and forestry & paper products – reported ongoing steep job cuts, some 18 of the 25 more detailed sectors covered by the PMI reported higher employment in both August and September, which represents the broadest jobs growth by sector for over three years.

US reports highest job gain since 2022

Among the major developed economies, the strongest job gain was reported in the US in September, where the improvement was the steepest since June 2022. However, strong job creation also continued to be reported in Japan, with the September gain among the highest recorded by the survey after the pace of hiring revived again during the month.

Modest employment growth was seen in the eurozone for only the second time in the past nine months, but UK jobs continued to be cut, albeit with recent months having seen a moderation in the pace of job losses.

Both Canada and Australia, meanwhile, saw jobs being cut on average after net job creation had been reported in the prior three months.

Brazil’s labour market deteriorates at fastest pace since 2021

In the major emerging markets, job gains in India and mainland China contrasted with falling employment in Russia and Brazil. The latter reported the steepest decline since March 2021, with companies citing weak demand and political uncertainty.

While India led in terms of jobs growth, job creation in mainland China continued to run at one of the strongest rates seen over the past three-and-a-half years.