The U.S. labor market showed signs of slowing in September, according to new data from the Bureau of Labor Statistics (BLS). The economy added only 29,000 jobs for the month, falling short of economists’ expectations for an increase of 84,000 jobs. The unemployment rate rose to 4.2%, up from 4.1%.
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Average hourly earnings increased by just 0.1% from August and are up 3% year-over-year. This marks the sixth consecutive month that wage growth has lagged behind inflation. The BLS will release September's inflation figures on October 14.
Additionally, revisions to previous months' data indicate a loss of 60,000 jobs. The initial report for July was revised from an increase of 21,000 jobs to a decrease of 10,000, while the August job growth was adjusted down from 162,000 to 133,000.
September's job gains represent the third lowest of the year, following a loss of 156,000 jobs in February—attributed to significant cuts in federal employment—and a decline of 10,000 jobs in July, largely from local school systems reducing staff.
Republican Party officials, including President Donald Trump, have faced declining poll numbers tied to economic performance, influenced by ongoing trade disputes, geopolitical tensions, and inflationary pressures. The Democrats are using this jobs report to argue that the economic conditions under Trump are worsening, hoping to gain ground in the upcoming midterm elections.
Bond yields have surged to levels unseen in decades, with U.S. Treasury bond yields reaching their highest since 2002. This increase has contributed to a rise in average 30-year fixed mortgage rates, which have climbed to as much as 7.6%. Additionally, gas prices have nearly doubled since February, and commercial diesel fuel prices have risen 70% this year.
Despite the overall decline in job growth, sectors such as healthcare added 17,000 jobs, although at a slower pace than the prior year's average. The construction sector saw an addition of 11,000 jobs fueled by continued demand for skilled workers in AI data center projects. Manufacturing also increased by 9,000 jobs. However, many industries, including oil and gas, professional services, and hospitality, reported little to no change in employment levels.
Despite the overall slowdown, stock futures surged after the jobs data was released, as a weaker job market may influence the Federal Reserve to refrain from raising interest rates in its upcoming meeting.