American employers barely added jobs in September, delivering a shockingly weak employment report that has reshaped expectations for the Federal Reserve’s next move.
Nonfarm payrolls rose by just 29,000 last month, far below the roughly 90,000 new jobs economists had forecast, according to the Labor Department’s Bureau of Labor Statistics. The unemployment rate ticked up to 4.2% from 4.1% in August, as 485,000 more people entered the workforce. In all, the economy added 60,000 fewer jobs in July and August than previously reported, with July’s figures revised into negative territory — a net loss of 10,000 jobs.
Where the few gains came from
Healthcare once again carried most of the growth, adding 17,000 positions — still well below its 12-month average of 33,000. Construction payrolls rose by 11,000 and manufacturers added 9,000, while financial activities shed 7,000 jobs. Average hourly earnings crept up just 5 cents to $37.81, with annual wage growth slowing to 3.0%.
Economists described the labour market as stuck in a “low-hire, low-fire” state: companies are not cutting staff in large numbers — first-time unemployment claims are hovering at 57-year lows — but they are barely hiring either. A late Labor Day holiday in September may have distorted the seasonal adjustments, economists noted.
What it means for the Fed
The weak print almost certainly takes another interest rate hike off the table for the Fed’s October 27-28 meeting. Markets slashed the odds of a hike to roughly 13%, down from about 69% a week ago. The central bank raised rates last month to a 3.75%–4.00% range — its first hike in three years — but with inflation cooling, traders now expect the Fed to hold steady.
“This is a disappointing jobs report and a reminder that the low-hire, low-fire labour market never went away,” said Olu Sonola, head of US economics at Fitch Ratings. But he cautioned that inflation, not jobs, remains the number that matters most for policymakers.
Economists also warned of growing headwinds from the US-Israel war with Iran — record diesel prices, strained supply chains and tariff anxiety — that could begin disrupting the labour market by the end of the year.
Source: Virginia Business / Reuters