US Labor Market Slumps in September as Job Growth Falls to 29,000

Key points

• Nonfarm payrolls rose by just 29,000 in September, missing forecasts of 84,000 to 90,000.
• The unemployment rate increased to 4.2%, driven by a surge in labor force participation.
• Wage growth slowed to 3% annually, the lowest since May 2021, lagging behind inflation.
• August and July job figures were revised downward, with July showing a net loss of 10,000 jobs.
• Healthcare, construction, and manufacturing drove most of the job gains, while government and tech sectors lost jobs.
• Market-implied odds of the Federal Reserve holding rates steady at its October meeting jumped to 82.8%.

Background

The September report follows a strong August jobs print of 162,000, which had exceeded expectations. However, recent revisions have weakened the labor market's apparent strength, with July and August figures adjusted downward. The weak September data comes amid persistent inflation and a 'low-hire, low-fire' labor market, with the Federal Reserve focusing on price stability over job growth.

How outlets are covering it

CNN and The Washington Post emphasize the political implications of the weak jobs report, noting it adds to challenges for Republicans ahead of the November 3 midterms. CNBC and Yahoo Finance focus on the market reaction, highlighting how the data reinforced expectations that the Federal Reserve will hold rates steady in October. All sources agree that wage growth has slowed to a five-year low, but CNN and The Washington Post stress the impact on consumer spending, while CNBC notes the Fed's focus on inflation.

Why it matters

The weak jobs report signals a softening labor market, which could lead to lower interest rates from the Federal Reserve. However, the slow wage growth and rising unemployment may weigh on consumer spending and economic growth. The data also adds political pressure to Republicans as they fight to keep control of Congress in the upcoming midterms.

What to watch

The Federal Reserve is expected to hold rates steady at its October 27-28 meeting, with markets pricing in a high probability of no change. The next jobs report will be crucial for assessing the labor market's trajectory, and the Federal Reserve's December meeting will be watched for any shifts in monetary policy. The weak data may also influence consumer spending and economic growth in the coming months.