Payroll rebound and higher unemployment rate
The United States added 119,000 jobs in September, well above expectations for 50,000, according to the first Bureau of Labor Statistics report since the record 44-day government shutdown. The gain followed a downward revision showing 4,000 jobs lost in August. July’s total was also revised slightly lower. Despite the surprise increase, the unemployment rate rose to 4.4 percent, its highest level since October 2021.
Wage growth showed mixed signals. Average hourly earnings grew 0.2 percent on the month and 3.8 percent year over year. The figures were slightly softer than economists’ monthly forecast but marginally above expectations on an annual basis.
Economists noted that the report provides only a partial snapshot. The data was collected before the shutdown and does not capture more recent labor market conditions. Daniel Zhao, chief economist at Glassdoor, said the results highlight resilience before the government closure but also “a muddy picture” due to revisions and the climb in unemployment.
Market reaction and implications for the Federal Reserve
Financial markets welcomed the release. Stock futures rose and Treasury yields eased as investors assessed the mix of stronger payrolls and higher unemployment. Traders continued to expect the Federal Reserve to keep interest rates unchanged at its 9-10 December meeting, the final policy gathering of the year. Minutes from the October meeting signaled reluctance among policymakers to cut rates again without clearer evidence on economic momentum.
Seema Shah, chief global strategist at Principal Asset Management, said the report was “backward looking” but still influential for markets. She noted that equities favored the stronger payroll number, while bond markets focused on the cooling wage data and uptick in unemployment, both of which might leave the door “just barely open” for a December rate cut.
Sector breakdown and labor force dynamics
Job creation came mainly from services. Health care added 43,000 positions, consistent with its steady pace this year. Bars and restaurants grew payrolls by 37,000, while social assistance contributed 14,000. Losses were concentrated in transportation and warehousing, which shed 25,000 jobs, and in professional and business services, where a drop of 16,000 temporary help positions contributed to an overall decline of 20,000.
Federal government employment also fell by 3,000, adding to a year-to-date loss of 97,000.
The household survey provided additional context. Employment rose by 251,000 and the labor force expanded by 470,000, reaching a record 171.2 million. The participation rate edged up to 62.4 percent, the highest level since May. Full-time employment increased sharply by 673,000 while part-time employment dropped by 573,000.
Data delays and the road ahead
The shutdown disrupted normal data collection, creating uncertainty for policymakers weighing the next steps on interest rates. Officials cut borrowing costs in September and October but stressed the difficulty of navigating policy without timely indicators. Minutes from the October meeting showed many preferred to delay an additional cut in December.
With the September figures now available, the BLS plans to release combined jobs data for October and November on 16 December. However, because household surveys were not completed during the shutdown, October’s report will be released without an unemployment rate calculation.
