US adds just 29,000 jobs as hiring slowdown complicates rate outlook

Healthcare accounted for 17,000 of the mere 29,000 jobs added by US employers in September, leaving much of the economy with little hiring momentum. Unemployment edged up to 4.2%, according to Guardian Business (direct), reporting US Bureau of Labor Statistics figures. For Americans already facing higher prices and borrowing costs, the final jobs report before the midterm elections offered another sign of a cooling labor market.

The hiring total was less than half the increase of just under 70,000 that economists had expected. Information, financial and professional industries lost jobs. Earlier months also looked weaker after revisions: July and August together recorded 60,000 fewer jobs than initially reported. The revised figures showed a loss of 10,000 jobs in July and an increase of 133,000 in August, making September a marked slowdown.

A jobs market moving at different speeds

Growth in average hourly earnings slowed to 3%, its lowest rate in more than five years. The headline unemployment rate has stayed relatively stable since last year, when it reached 4.5% in November. But that broad measure masks a widening gap: unemployment among Black Americans rose a full percentage point to 7%, twice the rate among white Americans.

Other indicators suggest employers are neither hiring nor dismissing workers rapidly. Applications for unemployment benefits edged lower for a fourth consecutive week, the Labor Department said on Thursday. Job openings and hiring changed little in August. Together, those readings point to the continuing pattern of limited recruitment and limited layoffs described in the source report.

A separate private-sector survey had offered a brighter signal earlier in the week. Payroll company ADP reported that private employers added 90,000 jobs and that hiring accelerated for the first time since May. Healthcare, education and hospitality drove that improvement. The stronger ADP reading contrasted with the much smaller gain in the September government report.

Higher prices keep pressure on the Fed

The slowdown arrives as the Federal Reserve, the US central bank, weighs employment against persistent inflation. The US-Israel war on Iran has pushed prices higher, particularly for energy, according to Guardian Business. Last month, the Fed raised interest rates for the first time in three years. Chair Kevin Warsh stressed the labor market’s strength at the time, while warning that inflation remained too high.

Warsh described the labor market as “basically running consistent with full employment”.

Households are still facing steep costs. Mortgage rates rose from 7% to 7.28% on Thursday, reaching their highest level in three years in the biggest weekly jump since 2022. The yield on the 10-year US Treasury—a government borrowing rate that influences mortgages and other loans—also reached a 24-year high amid a global bond sell-off. Higher oil prices have cost Americans an estimated $936 per household.

The next test is whether weaker hiring changes the Fed’s timetable. Guardian Business reported that September’s figures reduced expectations of another rate increase at the central bank’s last meeting before the 3 November midterms. Most officials had projected at least one more increase before year-end. Attention now shifts to whether that move comes at the December meeting instead.