WASHINGTON — The U.S. economy added just 29,000 jobs in September, far below economists’ expectations, and the unemployment rate ticked up to 4.2%, the Labor Department reported Friday — a weak reading that gave Federal Reserve policymakers more reason to wait before raising interest rates again.
Economists polled by Reuters had forecast 90,000 jobs, and earlier months were revised sharply downward: August’s gain was cut from 162,000 to 133,000, and July was revised to a loss of 10,000 jobs, removing a combined 60,000 jobs from initial reports, according to the Guardian. Healthcare added 17,000 jobs, the largest share of September’s gains, while construction added 11,000 and manufacturing 9,000; the financial sector lost jobs. Average hourly earnings grew 3% from a year earlier, the slowest pace in about five years.
The Federal Reserve raised short-term borrowing costs by a quarter of a percentage point last month — its first hike in more than three years — to help get inflation back toward 2%, citing higher prices tied to the Iran war and other shocks. After Friday’s data, interest-rate futures were priced for less than a one-in-five chance of another hike at the Fed’s October meeting, down from more than one-in-four previously, Reuters reported. Traders eased bets on a December hike as well, though that move is still priced at a nearly 90% probability.
Markets welcomed the soft report. The benchmark 10-year Treasury yield dropped to about 5.18% after touching 5.344% on Thursday — its highest since 2002 — in a global bond rout that had pressured stocks all week, CNBC reported. The report was the final monthly jobs reading before the November 3 midterm elections, arriving with voters already anxious about prices and borrowing costs.
“Today’s data argues for patience, not panic,” Seema Shah, chief global strategist at Principal Asset Management, said, according to Al Jazeera. “The Fed needs to see a reacceleration in inflation, not just resilience in growth, to justify another hike this year.” Businesses are holding back on hiring as energy costs and inflation stay elevated, CBS News reported, though layoffs remain low — a sign the weakness is a hiring freeze rather than a wave of job cuts.