In September, U.S. employers added only 29,000 jobs, while the unemployment rate rose from 4.1% to 4.2%. This figure was significantly below the approximately 90,000 jobs that economists had anticipated, according to federal data released on Friday. The underwhelming job numbers may impact the Federal Reserve’s upcoming interest rate decisions after rates were increased in September.
The Bureau of Labor Statistics (BLS) also adjusted previous months’ employment figures, noting that July’s payrolls were originally reported as a gain of 21,000 jobs but were revised to a loss of 10,000. August’s numbers were lowered from 162,000 jobs to 133,000. Altogether, these updates accounted for the removal of 60,000 previously reported jobs from the total.
On average, employers created about 51,000 jobs per month between July and September, a noticeable decline compared to earlier hiring metrics this year.
Wage growth has also continued its slowdown. Average hourly earnings saw a minimal increase of 0.1% in September, representing a 3% rise from the previous year, with the average hourly rate reaching $37.81.
The report illustrated a mixed scenario across various industries. Health care added 17,000 jobs—about half of its average monthly gain from the past year. Meanwhile, construction gained 11,000 jobs, and manufacturing saw an addition of 9,000 positions. However, several white-collar sectors experienced job losses, with information jobs decreasing by 10,000, financial activities losing 7,000, and professional and business services falling by 9,000.
Interestingly, Americans’ outlook on unemployment appears more pessimistic, with expectations for higher unemployment in the coming year reaching their highest point since April 2020, despite historically low layoff numbers.
This less optimistic employment data might provide the Federal Reserve with justification to maintain current interest rates during their October meeting. The central bank had previously raised its benchmark rate by 0.25 percentage points in September, bringing it to a range of 3.75% to 4%, the first increase since 2023, mainly due to ongoing inflation concerns.
Following this report, expectations for another increase in October have diminished, with interest-rate futures suggesting about a 16% chance of an additional quarter-point hike, as reported by Reuters. Treasury yields dropped after the data release, while stock futures increased, indicating that investors viewed the weaker employment numbers as a sign that the Fed might avoid tightening monetary policy further.
