US Adds 29,000 Jobs in September as Unemployment Ticks Up to 4.2%
The US added a disappointing 29,000 jobs in September as unemployment rose to 4.2%, signaling a cooling labor market and easing inflation pressures that buoyed Wall Street futures.
The US labor market recorded a disappointing performance in September, adding only 29,000 jobs while the unemployment rate ticked up to 4.2%. Analysts had anticipated the addition of 84,000 new positions and an unemployment rate holding steady at 4.1%, matching August's figures. Furthermore, August's job growth was downwardly revised to 133,000 from the initial 162,000 estimate.
Wage Slowdown and Inflation Metrics
Alongside weaker job creation, average hourly earnings exhibited an unexpected deceleration. Annual wage growth registered at 3.0%, down from 3.1% in August and missing the consensus forecast of 3.2%. Monthly figures similarly reflected subdued wage pressures. Meanwhile, annual inflation stood at 3.4% in August, with the Federal Reserve's benchmark interest rate remaining at 4.0%.
"A weak employment report reduces the likelihood of a rate hike because it indicates an economic slowdown and a cooling labor market."
Market Reactions and Federal Reserve Outlook
Earlier data revealed a surprising slowdown in August personal consumption expenditures (PCE), the Federal Reserve's preferred inflation gauge. Annual PCE rose by 2.6%, falling short of the anticipated 3.7% increase and July's 3.4% rate. Core PCE remained unchanged month-over-month at 3.0%, below expectations of 3.3%.
Traders swiftly interpreted the soft labor data as positive news, driving Wall Street stock futures upward while US Treasury yields plummeted from recent multi-decade highs. The cooling labor market and moderating wage growth lessen inflationary pressures, reinforcing expectations that the Federal Reserve will keep interest rates unchanged at its upcoming October meeting.
