U.S. employers added just 29,000 jobs in September, far short of forecasts, while the unemployment rate climbed to 4.2%. Downward revisions erased 60,000 jobs from July and August, and wage growth slowed, reinforcing bets that the Federal Reserve will hold rates steady at its next meeting.
September payrolls grew by just 29,000, a sharp slowdown from a revised 133,000 in August and well below the 90,000 consensus. The unemployment rate rose from 4.1% to 4.2%, above expectations for no change, and wage growth cooled at the same time, adding to signs that the labor market is losing momentum.
Hiring breadth narrows
Job gains stayed concentrated in a handful of sectors. Health care added 17,000 jobs, construction 11,000 and manufacturing 9,000, while government employment fell 17,000 and professional and business services declined 9,000. Temporary help services fell by 11,000 and information services lost 10,000 amid worries over artificial intelligence's effect on jobs.
Prior months revised sharply lower
The report also cut prior estimates. July payrolls were revised from an initial gain of 21,000 to a loss of 10,000, and August was revised down from 162,000 to 133,000, leaving the two months combined 60,000 lower than previously reported.
Wages slow, participation ticks up
Average hourly earnings rose just 0.1% month-over-month, missing the 0.3% consensus, while annual wage growth stood at 3.0%. Even so, the household survey was firmer: labor-force participation rose from 61.6% to 61.8% and household employment increased by 406,000, suggesting the rise in unemployment was not simply the result of broad job losses.
Markets lean toward a Fed pause
Traders read the soft report as reinforcing the case for the Federal Reserve to hold rates at its upcoming meeting. Stock futures jumped and Treasury yields slumped after the release, while market-implied odds of a hold at the Fed's Oct. 27-28 meeting rose to 83.7%. The FOMC had raised its benchmark rate a quarter percentage point in September, and the Atlanta Fed is tracking third-quarter GDP growth at 3.7%, even as hiring slows.
Sources: U.S. Bureau of Labor Statistics, ActionForex, CNBC
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