September Payrolls Come In Far Short of Expectations

The US added 29,000 jobs in September, far short of expectations^1,2. The reading was described as a sign that the labour market remains steady but may not be able to deliver consistent and sizable employment gains². Anemic hiring fell far short of forecasts even as the unemployment rate stayed near historic lows².

The jobless rate still moved. Unemployment rose to 4.2 per cent in September, though it has remained remarkably stable amid population shifts and a decline in labour force participation⁴. One account characterised the month as a sharp slowdown in the jobs market, with American employers pausing hiring as midterm elections approach³.

Why it matters to investors

The report lands directly on the rate decision. It adds to evidence that the Federal Reserve will hold rates steady at its October meeting¹. That reinforces the message from Fed officials this week, and it removes one argument for acting now, since a near stall in hiring is hard to square with a tightening that is meant to cool demand^1,2.

Private sector data had pointed the other way. ADP reported that US private payrolls added 90,000 jobs in September, with the more comprehensive government report expected later in the week⁵. Economists surveyed by Reuters had projected what the official data would show⁵. One account framed the ADP figure as the private sector ending a three-month hiring slowdown, with job creation rebounding and pay growth noted alongside it⁶.

What to watch

Layoffs are not the problem. Weekly claims for unemployment benefits fell for a fourth straight week to 197,000, which was 1,000 lower than the revised 198,000 reported a week earlier, against economist expectations of a rise to 200,000⁷.

Announced job cuts tell a similar story with a caveat. Year-to-date cuts of 573,195 are down 39 per cent from last year, but that comparison is distorted by the previous year’s federal workforce reductions, and excluding government the decline is smaller⁸. The combination to watch is a low firing rate alongside near-zero hiring. It keeps the unemployment rate from rising quickly, which is what the stability noted in the September report reflects^4,7. It also means fewer new entrants are being absorbed than the headline rate alone would suggest^4,8. Taken with the September reading, the picture is a labour market that is neither shedding workers at speed nor adding them at the pace seen earlier in the year^1,7,8.