US employers added far fewer jobs than expected in September, pointing to a further cooling in the labour market ahead of the Federal Reserve’s next policy meeting. Non-farm payrolls increased by only 29,000 during the month, well below the market forecast of about 90,000.
The unemployment rate also moved higher, rising to 4.2% from 4.1% in August, according to data released by the US Bureau of Labor Statistics.
Hiring slows as unemployment rises
The latest report also showed that employment growth in the previous two months was weaker than initially estimated. Payroll gains for July and August were revised down by a combined 60,000. August’s job additions were revised to 133,000 from the earlier estimate of 162,000.
Despite the deterioration in hiring, unemployment remains relatively low by historical standards. The rate has stayed between 4.1% and 4.3% since March, suggesting that the labour market is weakening without a sharp rise in joblessness.
The September employment figures are particularly significant as they represent the final monthly jobs report before the November midterm elections. Investors are also watching the data closely for indications of the Federal Reserve’s approach to interest rates.
Markets reassess Fed rate outlook
The weaker employment figures could reduce pressure on the Fed to raise interest rates further, although inflation remains a major concern for policymakers. Traders responded by scaling back expectations of another rate increase.
Treasury yields moved lower as expectations for further monetary tightening weakened. The 10-year Treasury yield fell to about 5.18%, while the two-year yield declined to roughly 4.72%. The two-year yield is closely watched because it reflects expectations for Fed policy.
Oil prices also eased after the employment figures. Brent crude fell below $100 a barrel as markets assessed the US economic outlook alongside developments in West Asia and possible additional crude and diesel stock releases in Europe.
