MS NOW · 41 minutes ago
by Charlie Herman · News
After an unexpectedly strong jobs report in August, employers created fewer jobs in September than economists had forecast. The Labor Department said Friday that the economy added 29,000 jobs last month, lower than the 90,000 expected. Revisions to the previous two months found 60,000 fewer jobs than were created than previously reported.
The unemployment rate rose slightly to 4.2% from 4.1%.
“The US labor market delivered more of the same in September,” wrote Cory Stahle, senior economist at Indeed. “Steadiness without a spark.”
The slowdown in hiring last month gives the Federal Reserve room to wait and see how the economy is faring as interest rates rise.
“A report like this may make some committee members hesitant to rasie rates again in October,” said Stahle “The labor market is still aloft, but it’s unclear how long it can keep circling while it waits for inflation to clear the runway.”
Friday’s release is the last jobs report before the midterm elections, as Republicans fight to maintain their majorities in the House and Senate. Voters are citing higher gas and grocery prices driven by President Donald Trump’s tariffs and war with Iran.
Nationwide, the average gallon of gasoline is nearly $4.4 nearly 40% higher compared to a year ago, according to AAA. The pain is exacerbated by wage increases that have not kept up with inflation. Compared to a year ago, average hourly earnings for private sector employees rose by 3%.
For the past several months, unemployment has been consistently low, but that’s because more people are leaving the labor force than finding a job. It’s a subject that has some economists scratching their head asking why? Are more people retiring? Is it a shortage of immigrant workers as many are being denied visas to work in the U.S.? Are people giving up on finding a job and simply leaving the workforce? Is it a statistical issue?
Friday’s jobs numbers come a day after the Commerce Department reported the economy grew 2.2% in the second quarter of this year, more than previously reported, but slower than the 2.5% growth in the first part of the year.
As for who is finding work, many jobs are in lower-paying industries like health care, where 17,000 new jobs were created overall.
The September unemployment numbers support the Federal Reserve’s recent decision to prioritize lowering inflation over stimulating job growth by raising interest rates.
In its statement announcing the rate hike at its last meeting, the central bank wrote, “Economic activity is expanding at a solid pace” and that “job gains have kept pace with the workforce, and the unemployment rate has changed little.”
Friday’s report still clears the way for the Fed to raise rates again. The question is when: at its next meeting, less than a week before the midterm elections, or when the bank holds its last meeting of the year in December?
This is a developing story. Please check back for updates.
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