US posts solid jobs data in September, unemployment up
U.S. job growth accelerated in September, but the labor market remained stagnant and failed to keep pace with new job seekers as employers grappled with the effects of import tariffs and integrated artificial intelligence into some positions.
The Labor Department’s closely watched employment report on Thursday said the unemployment rate rose to 4.4 percent, the highest level in the last four years, from 4.3 percent in August.
August employment data was revised to show employers are shedding jobs for the second time this year, underlining the softness in the labor market.
Other data from the Labor Department showed layoffs remained low in mid-November; This suggests that the job market is stuck in what economists and policymakers call “no hiring, no firing.”
While some economists thought the rise in the unemployment rate strengthened the argument for the Fed to cut interest rates next month, others said the better-than-expected job growth suggested the U.S. central bank should stay on track, especially given that policymakers won’t get another jobs report before the Dec. 9-10 meeting.
“The upside surprise in this report is positive, but likely reduces the likelihood of a rate cut in December,” said Olu Sonola, head of U.S. economic research at Fitch Ratings.
“The slight increase in the unemployment rate complicates the story; pick your poison, stronger job growth or rising unemployment, because the good news may not be that good.”
The Labor Department’s Bureau of Labor Statistics said nonfarm payrolls rose by 119,000 jobs after a downwardly revised 4,000-job decline in August.
Economists polled by Reuters had forecast 50,000 new jobs would be added in August, following a previously reported increase of 22,000. The survey of organizations also showed job growth in July fell by 7,000 positions to 72,000 positions.
The report was originally supposed to be released on October 3 but was delayed due to the federal government shutdown. The 43-day shutdown, the longest in U.S. history, forced the BLS to cancel the release of its October report because no data was collected for the household survey to calculate the unemployment rate for that month.
Job gains in September were welcomed in part because of difficulties adjusting to workers leaving their jobs over the summer; This has led to higher payroll numbers in the leisure and hospitality sector and retail.
The healthcare industry continued to lead employment growth, adding 43,000 new jobs in September, mostly in ambulatory care and hospitals. Employment at restaurants and bars increased by 37,000, while general entertainment and hospitality payrolls increased by 47,000.
Retailers added 13,900 positions. But more than 25,000 jobs were lost in the transportation and warehousing sector, while another 6,000 were lost in the manufacturing sector. While professional and business services payrolls decreased, most of the decline was driven by temporary help services.
Federal government employment fell another 3,000 jobs, bringing the total loss since January to 97,000. That number is expected to rise as tens of thousands of buyout workers leave state payrolls at the end of September.
The labor market has lost significant momentum this year, as evidenced by sharp downward revisions in nonfarm employment numbers. Economists and policymakers attribute the slowdown to reduced supply and demand for workers.
Economists estimate that the economy must create fewer than 100,000 jobs per month to keep up with growth in the working-age population; however, the increase in the unemployment rate in August and September indicates that the break-even rate may be higher.
“The unemployment rate has trended upward, but for the ‘right’ reasons because labor force participation is rising faster than solid gains in employment,” said Stephen Stanley, chief U.S. economist at Santander US Capital Markets.
“This is a far cry from the outcomes one would expect if the labor market were in a downward spiral.”
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