A report from the Labor Department released Friday revealed that the U.S. job market lost its momentum in September. Employers added just 29,000 jobs last month, well below what forecasters expected. The numbers also come with revisions that show the three-month picture weaker than previously reported.
The slowdown is not confined to a single month; revisions have reduced July and August’s job gains together by 60,000. Financial services and government lost workers, while nearly every other industry kept adding staff, though at a slow pace. Healthcare, long a steady source of hiring, added just 17,000 jobs last month.
Wells Fargo’s Sarah House, a senior economist, was cautious about the numbers. She framed her remarks with a measured tone, noting that the picture was mixed. “The good news is you’re not seeing a lot of layoffs,” she said. “But it’s really hard if you are one of those workers who loses your job or you’re new to the labor force or you’re coming back, there’s not a lot of turnover. So it makes it harder to get your foot in the door right now.”
What the Jobs Numbers Show
The September report did not display widespread reductions. It showed employment growth that barely changed instead. Across most fields, companies kept adding staff, though at a slow rate. Healthcare’s 17,000-job increase matches an industry that has long been a steady source of hiring. Financial services and government were the exceptions, losing workers rather than gaining them.
Another part of the report covers how often workers change jobs. Few people left their posts, so those who lost their positions did not find many openings to take up. This situation makes it difficult for people searching for work to get their foot in the door, even though the general state of unemployment has stayed steady.
Wages Still Not Keeping Up With Inflation
Pay growth slowed last month. Wages rose just 3% on average over the past year, according to the latest numbers, marking a smaller increase than what workers saw the month before. Given that prices have been climbing faster than paychecks lately, that modest gain likely falls short of matching inflation.
In the past few months, the cost of goods has grown faster than the size of paychecks, which means that the value of what workers can buy with their earnings has fallen. Since wages have not kept pace with rising prices, even employees who receive larger paychecks are still watching their spending power shrink.
Two weeks ago, the Federal Reserve pushed its benchmark interest rate up by a quarter percentage point to fight rising prices. A weak jobs report has made another increase less likely when policymakers meet later this month. That news gave stocks and bonds a small boost. Even so, investors still expect at least one more rate hike before the year ends.
Unemployment Rate Rose Despite More Workers
The jobless rate climbed to 4.2% in September, up from 4.1% the previous month. The increase came largely because more than 485,000 extra people entered the labor market. The proportion of adults either working or searching for work rose slightly, by two-tenths of a percent.
Adults who were working or actively searching for work made up a slightly larger share of the population, as measured by the participation rate.
What the Data Suggests Going Forward
According to the September report, the job market is decelerating without falling apart. Layoffs stay rare, serving as the encouraging part of the data. However, because workers aren’t leaving voluntarily, those who do lose their jobs are left with a much tighter market than the headline numbers indicate.
Another piece of evidence supports the worry: a 3% pay rise barely keeps up with rising prices, so it actually shrinks what workers take home in real terms compared with last year, putting pressure on family budgets.
Two weeks ago, the Federal Reserve raised interest rates with the aim of slowing inflation. The latest jobs report has since come in weaker than expected, which reduces the chances of further action in the short run. Investors, however, continue to anticipate at least one additional rate increase by year-end, a sign that monetary policy stays tight despite the weakening job market.
Key Facts Box
- September jobs: +29,000
- July and August revisions: -60,000 total
- Healthcare jobs added: 17,000
- Wage growth: +3% from a year ago
- Unemployment rate: 4.2%, up from 4.1%
- Additional workers: +485,000
- Participation rate: up two-tenths of a percent
This report’s central conclusion is that both the U.S. economy and its job market are losing momentum. Hiring has slowed, wages are barely matching the pace of inflation, and the unemployment rate is rising even as a larger number of people enter the workforce.
While layoffs stay uncommon, the absence of any real movement among employees makes the job market harder for people looking for work than the general numbers might make it seem. The economy is slowing down, and there is little sign of relief coming from hiring.
Source material: “The U.S. added only 29,000 jobs in September as job market lacks spark,” NPR.
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