U.S. Job Market Shows Signs of Weakness in September
Hiring slows significantly as unemployment rate ticks up to 4.2%
Quick Look
- The U.S. labor market cooled in September with only 29,000 jobs added, significantly missing expectations.
- While mass layoffs remain absent, hiring has slowed across most sectors, and real wages continue to lag behind inflation.
AI-generated summary
Why It Matters
The Federal Reserve recently raised benchmark interest rates by a quarter percentage point to combat inflation.
The U.S. job market showed signs of weakness in September as hiring slowed and the unemployment rate inched higher.
A report from the Labor Department Friday shows employers added just 29,000 jobs last month — far fewer than forecasters had expected. Job gains for July and August were also revised down by a total of 60,000 pushing July's job totals into the red.
The September report doesn't show widespread job cuts, although financial services and government shed workers. Most industries continued to add workers, but at a slow pace. Even health care, which has been a steady source of employment gains, added just 17,000 jobs last month.
"The good news is you're not seeing a lot of layoffs," says Sarah House, senior economist at Wells Fargo. "But it's really hard if you are one of those workers who loses your job or you're new to the labor force or you're coming back, there's not a lot of turnover. So it makes it harder to get your foot in the door right now."
Wages are still not keeping up with inflation
Average wages in September were up just 3% from a year ago. That's a smaller annual increase than the previous month, and probably not enough to keep pace with inflation. Prices have been rising faster than paychecks in recent months, so workers' real buying power is being eroded.
The Federal Reserve raised its benchmark interest rate by a quarter percentage point two weeks ago in an effort to curb inflation. The lackluster jobs report makes it less likely the central bank will raise rates again when policymakers meet later this month. That caused a modest rally in the stock and bond markets. Investors still expect at least one additional rate hike, however, before the end of the year.
Meanwhile, the unemployment rate in September rose to 4.2%, from 4.1% the month before. That was largely due to an influx of 485,000 additional workers. The share of adults who are working or looking for work inched up by two-tenths of a percent.
What to Watch
AI outlook — possibilities, not facts
Federal Reserve may not raise interest rates at the next meeting.
Possible · Within weeks
Open Questions
- Will the Federal Reserve pause rate hikes in the upcoming meeting?
- Will wage growth recover in the next quarter?
