Job Numbers Come In Cooler Than Expected As Previous Gains Get Revised Down

U.S. employers added just 29,000 jobs in September as unemployment rose and the government sharply revised down previous months’ gains, according to federal data released Friday.

The unemployment rate ticked up from 4.1% to 4.2%, while September payroll growth came in well below the roughly 90,000 jobs economists surveyed by Reuters expected. The weaker report could influence the Federal Reserve’s next interest rate decision after increasing rates in September.

The Bureau of Labor Statistics (BLS) reported that July payrolls were revised down from a gain of 21,000 jobs to a loss of 10,000, while August was revised down from 162,000 jobs to 133,000. The revisions erased a combined 60,000 previously reported job gains.

Employers added an average of roughly 51,000 jobs per month from July through September, a marked slowdown from hiring earlier in the year.

Wage growth also continued to cool. Average hourly earnings increased just 0.1% in September and were up 3% from a year earlier, according to BLS. Average hourly earnings rose to $37.81.

The report offered a mixed picture across industries. Health care added 17,000 jobs, roughly half its average monthly gain over the previous year, while construction employment increased by 11,000 and manufacturing added 9,000 positions.

Several white-collar sectors shed workers. Information employment declined by 10,000, financial activities lost 7,000 jobs and professional and business services fell by 9,000.

Americans’ expectations that unemployment will rise over the next year recently climbed to their highest level since April 2020 even as layoffs remained historically low.

The weaker employment data could give Federal Reserve officials more room to hold interest rates steady at their October meeting. The central bank raised its benchmark rate by 0.25 percentage points in September to a range of 3.75% to 4%, its first increase since 2023, citing elevated inflation.

Expectations for an October increase fell following Friday’s report, with interest-rate futures placing roughly a 16% probability on another quarter-point hike, according to Reuters.

Treasury yields fell following the release, while stock futures moved higher as investors interpreted the weaker labor data as reducing pressure on the Fed to tighten monetary policy again.

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