Key facts
- US added 29,000 jobs in September, missing expectations of 90,000.
- Unemployment rate rose to 4.2% in September.
- Hourly wages increased by 0.1% in September, up 3% year-over-year.
- The healthcare sector drove job growth.
- White-collar sectors lost jobs in September.
- More than 400,000 people joined the labor force in September.
The US labor market showed signs of cooling in September, with the economy adding only 29,000 jobs, a significant miss compared to the 90,000 expected by economists. The unemployment rate unexpectedly climbed to 4.2% from 3.9% in August, as nearly half a million more people entered the labor force seeking employment. Wage growth also moderated, with hourly earnings increasing by 0.1% for the month and 3% year-over-year, a slight decrease from the previous month's 3.1% gain.
Job gains were primarily concentrated in the healthcare sector, while white-collar industries experienced job losses. The construction sector saw a boost from data center development, adding 11,000 roles, though residential specialty trade contractors shed nearly 8,000 jobs.
The weaker-than-expected jobs report led to a sharp drop in US Treasury yields, with the 10-year yield falling as much as 6 basis points to 5.17%. Major stock indexes, including the Dow Jones Industrial Average, rallied on the news, as investors interpreted the data as a sign that the Federal Reserve might hold off on further interest rate hikes. Markets are now pricing in a 72% probability that the Fed will keep rates unchanged at its next policy meeting, up from 36% a week prior.