September Jobs Report Shows Limited Payroll Growth and Low Unemployment

According to the Bureau of Labor Statistics (BLS), September's hiring loss marks a decline from August’s recovery. Revisions to previous reports showed that July's payrolls were adjusted from a gain of 21,000 to a loss of 10,000, while August's increase was revised down from 162,000 to 133,000, resulting in a total reduction of 60,000 jobs over the two months. On average, employers added about 51,000 jobs per month from July through September, with labor force participation rising to 61.8% in September.

The stable job market supports consumer spending, which constitutes more than two-thirds of U.S. economic activity. Income growth, reported at 4.3%, has helped maintain spending even amid rising food and energy prices. The Federal Reserve considers employment and inflation in setting interest rates; the slight increase in unemployment and limited job loss gives them room to focus on ongoing inflation.

Key economic indicators reflect that consumer spending stayed robust, with Johnson Redbook sales increasing approximately 9% year-over-year, while other measures also showed a 6% rise. Rob Haworth, a senior investment strategy director at U.S. Bank Asset Management Group, emphasized the importance of low unemployment and rising incomes for consumer spending momentum.

The BLS Job Openings and Labor Turnover Survey (JOLTS) indicated 7.1 million job openings and 5.2 million hires in August. The quits rate held steady at 3.1 million, suggesting worker confidence in the job market. Meanwhile, initial unemployment claims remained low at 197,000 for the week ending October 3, supporting the trend of employers retaining staff. In September, 43,281 job cuts were announced, below historical averages and the lowest for that month since 2022.

The Federal Reserve, meeting on October 27-28, will assess whether current labor market conditions support a resilient economy while also considering inflation and consumer spending trends. Overall, while hiring slowed, the combination of low unemployment and increased household income can sustain consumer demand going forward.