Key Highlights:
- The U.S. added 29,000 jobs in September, well below the 90,000 consensus forecast.
- The unemployment rate rose to 4.2%, while earlier job gains were revised lower.
- Markets increased expectations that the Federal Reserve could hold interest rates as wage growth slowed.
U.S. Jobs Growth Slows Sharply in September
The U.S. labor market weakened in September, potentially giving the Federal Reserve more room to hold interest rates even as inflation remains elevated. The government’s Nonfarm Payrolls Report, released Friday morning, showed that employers added 29,000 jobs during the month.
The result was substantially below the consensus forecast of 90,000 jobs and marked a sharp slowdown from August. August’s increase was revised down to 133,000 jobs from the originally reported 162,000. July’s previously reported 21,000-job gain was also revised significantly, becoming a loss of 10,000 jobs.
Unemployment Rises as Hiring Momentum Fades
The unemployment rate increased to 4.2% in September, compared with expectations of 4.1% and August’s reading of 4.1%. The combination of weaker payroll growth, upward unemployment-rate pressure and downward revisions to prior months pointed to reduced labor-market momentum.
Wage growth also came in below expectations. Average hourly earnings rose 0.1% in September, well below the 0.3% forecast and August’s 0.3% increase. On a year-over-year basis, average hourly earnings were up 3%, compared with expectations of 3.2% and August’s 3.1% annual increase.
Markets React to Weak Employment Data
Financial markets moved in response to the softer employment report. Bitcoin, which was already higher during the session, continued trading just below $87,000 in the minutes following the release. U.S. stock index futures added to their gains, with the Nasdaq rising 1.2%.
Treasury yields declined as investors assessed the implications for Federal Reserve policy. The 10-year Treasury yield fell 7 basis points to 5.17%, while the 2-year yield dropped by a similar margin to 4.71%. Gold gained more than 1%, and the greenback fell against major currencies.
Why This Matters
The September employment figures are important for the Federal Reserve because they show a cooling labor market alongside slower wage growth. While inflation remains elevated, weaker hiring and subdued earnings growth could reduce pressure for additional interest-rate increases and give policymakers room to hold rates steady. The report’s downward revisions to July and August also indicate that recent labor-market strength was weaker than previously estimated.
Frequently Asked Questions
How many jobs did the U.S. add in September?
The U.S. added 29,000 jobs in September, below the 90,000 consensus forecast.
What happened to the unemployment rate?
The unemployment rate rose to 4.2% from 4.1% in August and exceeded the 4.1% forecast.
How did markets respond to the jobs report?
Bitcoin remained just below $87,000, Nasdaq futures rose 1.2%, Treasury yields declined, gold gained more than 1%, and the greenback weakened against major currencies.