US job growth slowed more than expected in September and the nonfarm payrolls count for the prior two months was revised sharply lower, almost taking another interest rate hike from the Federal Reserve this month off the table.
Labor Market Faces Headwinds as US Job Growth Weakens Amid Rising Unemployment
The Labor Department’s closely watched employment report on Friday also showed the unemployment rate increased to 4.2% last month from 4.1% in August as more people entered the workforce. First-time applications for unemployment benefits have been hovering at 57-year lows amid robust corporate profit growth and resilient domestic demand. All told, the economy added 60,000 fewer jobs in July and August than previously estimated.
The sharp moderation in job growth likely does not mark a sudden deterioration in labor market conditions. Economists noted that payrolls have a tendency to underperform when the Labor Day holiday falls relatively late in September, as was the case this year. There have been no signs of a broad increase in layoffs. But CPI remains the report that matters most. Volatility linked to the model the government uses to strip out seasonal fluctuations from the data likely accounted for both the meager payroll gains last month and the downward revision to the count for August.
Economists said the report reaffirmed the labor market’s “low-hire, low-fire” state and likely had no impact on near-term monetary policy, with inflation remaining the key focus. “This is a disappointing jobs report and a reminder that the low-hire, low-fire labor market never went away,” said Olu Sonola, head of US economics at Fitch Ratings.
“Weak job growth, a slightly higher unemployment rate, contained wage gains and downward revisions to earlier payroll estimates give the Fed little reason to keep an October rate hike on the table.
