US employers added only 29,000 jobs in September, representing a significant decline in growth that signals a cooling labor market just before the upcoming midterm elections. This figure fell well short of economist projections, which had anticipated nearly 70,000 new positions. Meanwhile, the national unemployment rate experienced a slight increase to 4.2%. US employers added just 29,000 jobs in September, a sharp drop from last month’s gains, and unemployment rose slightly to 4.2%, a sign of a cooling labor market in the final jobs report before the midterm election. The numbers were under half of economists’ expectations of just under 70,000 new jobs. When it hit 4.5% in November, the unemployment rate has remained relatively steady since last year.
Data from the US Bureau of Labor Statistics indicates that healthcare remains a primary driver of employment, contributing 17,000 new jobs. Conversely, the professional, information, and financial sectors reported losses. These results follow downward revisions for previous months; initial reports for July and August were collectively lowered by 60,000 jobs, with July showing a contraction of 10,000 roles and August adding 133,000. According to though job growth slumped over the summer – the labor market unexpectedly contracted in July and figures in June and May were revised sharply down from initial, – 162,000 jobs were added in August, the highest since March.
Earnings growth has also stalled, with average hourly wages increasing by only 3%, the lowest rate recorded in more than five years. Despite these trends, the Department of Labor noted that jobless claims have trended downward for four consecutive weeks. Disparities remain within the labor force, as unemployment among Black Americans rose by a full percentage point to 7%, a rate double that of white Americans. But a closer look at the data also reveals how not all Americans are experiencing the same labor market.
Federal Reserve Chair Kevin Warsh previously described the labor market as “basically running consistent with full employment,” while acknowledging that inflation persists at levels that have been “too high and for too long.” These cooling employment figures may influence the Federal Reserve’s strategy, potentially tempering expectations for interest rate hikes before the November 3 midterms, though officials had previously signaled another increase before year-end. The September release cools expectations for the US Federal Reserve to increase rates again in its final meeting before the 3 November midterms. Most central bank officials penciled in at least one more rate hike before the year’s end, which is now more likely to come at the Fed’s December conference, though the data still reflects an overall solid jobs market.
Economic pressures continue to weigh on households as mortgage rates hit a three-year high, climbing from 7% to 7.28% in a single week—the steepest weekly increase since 2022. Additionally, the 10-year treasury yield has reached a 24-year peak amid a global bond sell-off. These financial strains are compounded by rising energy costs, with higher oil prices estimated to have cost American households approximately $936 each.
The current landscape reflects a “slow-hire, slow-fire” environment, as hiring levels remain largely stagnant. While private payroll firm ADP had suggested a more optimistic outlook with 90,000 private sector jobs added, the official government data underscores broader economic instability. The US-Israel war on Iran has further exacerbated inflationary pressures, particularly through energy price spikes, influencing the Federal Reserve’s recent decision to raise interest rates for the first time in three years.
