September jobs report shows more growth but rising unemployment
The long-awaited September jobs report showed a larger-than-expected increase in nonfarm payrolls, but overall unemployment continues to rise, according to data released Thursday by the Bureau of Labor Statistics.
Nonfarm payrolls added 119,000 jobs in September, more than double Wall Street’s expectations of 50,000 jobs created for the month. The majority of job gains in September came from the healthcare and hospitality sectors. Many other sectors, such as manufacturing and professional services, are laying off workers.
The average hourly wage also increased by 0.2% for the month, up 3.8% from September 2024.
However, overall unemployment continues to rise. The BLS reported the rate stood at 4.4% in October. This is the highest level since October 2021.
The September jobs report does little to address the ultimate question facing Fed officials at their next meeting scheduled for Dec. 9-10: whether to reduce borrowing costs. There is widespread division within the Federal Open Market Committee charged with steering interest rates, and that was on full display with the FOMC minutes released Wednesday from the two-day September meeting.
The minutes indicate that “participants expressed widely divergent views” on the appropriate action to be taken in December. A faction of FOMC officials is content to hold off on further interest rate cuts after two consecutive quarter-point cuts this year. Other officials say a further reduction “may well be appropriate.”
The September jobs report presents an argument for both sides. Inflation hawks may cite the resilience of the labor market to justify further rate cuts. Officials on the other hand will highlight the rising unemployment rate to argue for a further reduction in interest rates.
However, a review will certainly raise eyebrows. The BLS revised August data to show that the U.S. economy shed 4,000 jobs that month.
Borrowing costs are currently between 3.75% and 4%. A lower interest rate tends to be associated with cheaper credit, which stimulates economic growth in most sectors and reduces the costs of mortgages, auto loans, and more.
This is the first BLS employment report released in two months, due to a government shutdown that virtually shut down all activity at the BLS for more than seven weeks. The BLS announced Thursday that it would not release an employment report for October because it was unable to collect real-time household surveys on employment status.
This information will be included in the November jobs report scheduled for release on December 16, meaning the next available monthly jobs data will not be available after the Fed meeting.
