The U.S. economy defied expectations in September, as employers added 336,000 new jobs—more than double what economists expected.

But a closer look at the numbers reveals that September hiring was anything but stellar.

According to the Department of Labor’s data, the September hiring spree was driven by part-time work—employers added 151,000 part-timers and let go of 22,000 full-time workers.

There were also 123,000 more people holding multiple jobs—something many workers are forced to do to make ends meet.

“Multiple jobholders count once in employment levels, but count twice in nonfarm payrolls,” according to data analyst Joseph Politano. In other words, multiple jobholders can inflate the official nonfarm payroll numbers and make total employment look better than it actually is.

Part-time jobs have grown by a staggering 1.2 million over the past three months, while full-time work has declined by around 700,000.

That’s the largest decline in full-time employment since Covid lockdowns, according to E.J. Antoni, an economist at Washington, D.C.-based think tank the Heritage Foundation.

The September job report had a few other important caveats: Government employment accounted for a disproportionately high 22% of the total gains, and the number of unemployed workers increased slightly to 6.36 million, the highest since January 2022.

It’s not just about jobs

The monthly nonfarm payrolls report is about more than just jobs. Since the Fed began raising interest rates a year-and-a-half ago, the report has been used as a guidepost for what the central bank might do next.

“Like most reports, the Fed will find things to like and dislike here,” said Vanguard senior economist Andrew Petterson.

From the Fed’s perspective, a positive takeaway from last month’s report was softening wage growth. Average hourly earnings rose by 0.2% from August and 4.2% year-over-year. The monthly increase was the smallest since February 2022 and the annual gain was the weakest since June 2021.

Weaker wage growth is good for the Fed because it means inflation is cooling and the need for higher interest rates is reduced. But it’s not good for workers who have seen their inflation-adjusted earnings decline.

The odds of another Fed rate hike before 2024 are nearly 50-50, according to CME Group. The central bank has two more meetings planned this year.

Two numbers to watch

Despite the apparent holes in the September jobs report, economists say only two numbers matter when gauging the Fed’s next move: inflation and GDP growth.

The Fed’s inflation target is 2%, which means wage growth can’t be higher than 3.5% to reach that target consistently.

To achieve “non-inflationary” growth, GDP expansion should be around 1.8%. Currently, GDP forecasts for the third quarter of 2023 are as high as 4.9%, according to the Atlanta Fed.

In other words, the Fed probably has more work to do before it is content that the inflation genie is back in the bottle. According to economists, overcoming “peak inflation,” which occurred in June 2022, doesn’t mean the Fed’s job is done.

“Peak inflation is not equal to mission accomplished,” Don Rissmiller of Strategas Research Partners told Bloomberg. “History argues strongly against a stop-and-go monetary policy.”