The U.S. economy added just 29,000 jobs in September, far fewer than economists expected, and the unemployment rate rose slightly from 4.1% to 4.2%, the Labor Department reported Friday.
The closely watched jobs report showed that the labor market is cooling, just weeks before Federal Reserve officials meet again to decide whether to raise interest rates for a second time this quarter.
Economists had predicted roughly 90,000 added jobs last month, down sharply from the 162,000 initially reported for August, with unemployment holding at 4.1%. August’s gain was revised down to 133,000.
In September, the economy gained jobs in health care, nonresidential specialty trade contractors and some manufacturing industries.
But jobs were lost in financial activities, insurance carriers and related activities.
Download the Straight Arrow app today to get the stories that matter free from manipulation, bias or agenda.™
Point phone camera here
An uneven year for the labor market
This has been an uneven year for the U.S. labor market.
August’s better-than-expected jobs number, the strongest monthly gain in five months, followed much weaker hiring earlier in the summer.
Job growth has also been concentrated in certain industries, like food services, local government and education. Other fields, like the information industry, have shed jobs.
Separately, the Labor Department’s Job Openings and Labor Turnover Survey, or JOLTS, released Tuesday showed that U.S. hirings dropped slightly in August to 7.1 million, but the number of layoffs was roughly the same as the prior month.
Friday’s numbers suggest the August jobs rebound may have been a temporary bump and that employers remain reluctant to expand their workforces even as layoffs remain relatively low.
Andrew Holmes, CEO of global executive search firm Kingsley Gate, told Straight Arrow that Friday’s weaker-than-expected report did not surprise him, based on what he is hearing from business leaders.
Many are “taking a wait-and-see approach” to hiring and spending because “multiple risks loom,” he said, pointing to persistent inflation, uncertainty about consumer strength, rising U.S. debt, higher borrowing costs and concerns about a potential artificial intelligence bubble.
What it means for the Fed
Friday’s report comes at an especially critical moment for the Federal Reserve.
The central bank raised its benchmark interest rate by a quarter percentage point in September to a range of 3.75% to 4%, its first rate increase in three years, in an effort to rein in stubbornly high inflation.
But expectations for another increase in October have fallen sharply after inflation data released this week came in below expectations.
The Personal Consumption Expenditures price index, the Fed’s preferred inflation gauge, rose 3.4% from a year earlier in August.
That welcome inflation news could give the Fed pause on raising borrowing costs, even though inflation remains well above the Fed’s target rate of 2%.
Friday’s weaker-than-expected jobs report could provide yet another reason to keep interest rates where they are. Higher borrowing costs could weaken an already slowing labor market.
This debate is meaningful for everyday Americans because the Fed interest rate influences borrowing costs throughout the economy, including mortgages, auto loans, credit cards and business loans.
The Fed’s next interest rate decision is scheduled for Oct. 28.
Round out your reading
- Lawyer says 57 Cornell frat members were in the group chat. Could their silence be a crime?
- Florida county discovers mysterious Flock cameras with no obvious owner.
- Off Script: They won their primaries on one message. Now it’s disappearing.
- Some question whether a popular affordable housing policy is making the nation’s home shortage worse.
- Kelvin wave incoming: Why the US should care.
