The U.S. labor market lost momentum in September, with employers adding 29,000 jobs while the unemployment rate edged up to 4.2%. The figures marked a sharp slowdown from August and came in below economists’ expectations, adding to evidence that hiring has become more restrained across much of the economy.
The report also showed weaker wage growth and downward revisions to previous payroll estimates. At the same time, layoffs remained limited across many industries, leaving the labor market in a pattern that economists have described as one of slow hiring and relatively little firing.
Hiring Slows As Earlier Job Gains Are Revised Lower
According to the U.S. Bureau of Labor Statistics figures, employers added 29,000 jobs in September. July payrolls were revised from a gain of 21,000 to a loss of 10,000, while August employment growth was lowered from 162,000 to 133,000. Together, those revisions removed 60,000 jobs from previously reported totals.
Private payrolls increased by 46,000 in September, while government employment fell by 17,000, according to Fox Business. Federal government employment declined by 1,000 jobs, state government payrolls fell by 3,000 and local government employment dropped by 13,000, with much of the decline in state and local education.
Healthcare remained one of the main sources of new employment, adding about 17,000 jobs. Ambulatory healthcare services and hospitals recorded gains, while nursing and residential care facilities lost positions. Construction employment increased by 11,000, and manufacturing added 9,000 jobs.
The broader picture was more subdued. Financial activities lost 7,000 jobs, while several major industries showed little change. NPR reported that restaurants and bars added 11,000 jobs during the month, accounting for a substantial share of the overall payroll increase.
Economists also pointed to the difficulty facing people trying to enter or re-enter the workforce. Sarah House, senior economist at Wells Fargo, told NPR that layoffs remained limited, but weak turnover meant there were fewer opportunities for workers seeking new positions.
Wage Growth Cools As the Federal Reserve Watches the Labor Market
Average hourly earnings rose 0.1% from August and 3% from a year earlier. According to NBC News, that marked the sixth consecutive month in which wage growth remained below inflation, although September inflation data had not yet been released.
Labor force participation stood at 61.8% in September, while the employment-population ratio was 59.2%. The number of people unemployed for 27 weeks or longer was little changed at 1.9 million, representing 27.1% of all unemployed workers. Another 4.5 million people were working part time for economic reasons.
The weaker labor figures also affected expectations around monetary policy. The Federal Reserve had raised its benchmark interest rate by a quarter percentage point in September as officials continued to respond to inflation.
According to NPR, the September employment report made another rate increase at the Federal Reserve’s late-October meeting appear less likely, although investors still expected at least one additional increase before the end of the year.
Markets moved higher after the report. Fox Business reported that the S&P 500 was up 0.96% by mid-morning, while the Dow Jones Industrial Average rose 0.61% and the Nasdaq Composite gained 1.63%. NBC News later reported that the S&P 500 closed 0.74% higher and the Nasdaq finished up 1.1%.
