Highlights
The U.S. economy added far more jobs than expected in September, the last month with uninterrupted data collection before the federal government shutdown, although the unemployment rate ticked up. However, the numbers are significantly behind the pace set in September 2024. In addition, the number of jobs created during the prior two months was revised lower by 33,000 than previously reported.
The odds of a December rate by the Federal Reserve remain finely balanced given the lack of new inflation data to silence the hawks while this report does not fully allay concerns regarding the depth of labor market weakness.
This report takes on added significance because the impact of the prolonged government shutdown forced the BLS to cancel the release of the October employment report.
Furthermore, the November jobs data which will also include information from the establishment survey for October - will not be published until December 16, meaning this report is the only official national employment datapoint Fed officials have in hand by the next FOMC meeting (Dec. 9-10).
U.S. non-farm payrolls expanded by 119,000 in September, following a revised 4,000 contraction in August (previously +22,000), and +72,000 in July (previously +79,000). Expectations in the Econoday survey of forecasters was for 50,000 jobs added. September 2024 saw the economy add 240,000 jobs.
The unemployment rate came in at 4.4%, up from 4.3% in August and compared to the consensus expectations for 4.3%. The labor force participation rate ticked up to 62.4% from 62.3% in August.
Private sector employment grew by 97,000, after adding just 18,000 jobs in August (revised down from +38,000 previously reported) and 56,000 in July (previously +77,000), compared to expectations for +60,000 in the Econoday survey. Within that, the service sector added 87,000 jobs, picking up after 50,000 jobs added in August and 72,000 created in July. The private sector added 240,000 jobs in September 2024.
The tariffs-impacted goods-producing sector saw a slight rebound in job creation, adding 10,000 jobs in September after 32,000 jobs were lost in August and down by 16,000 in July.
The manufacturing sector continues to shed workers, cutting 6,0000 workers following contractions of 15,000 and 9,000, respectively, in August and July.
The data on public sector employment does not capture the month and a half long government shutdown. Federal government employment continued to decline in September (-3,000) and has contracted by 97,000 since January.
In September, the average workweek for private sector employees was 34.2 hours for the fourth month in a row. In manufacturing, the average workweek edged down to 39.9 hours from 40.0 hours in August, but overtime remained unchanged at 2.9 hours. The average workweek for production and nonsupervisory employees increased by 0.1 to 33.7 hours in September.
Given the increased attention to the affordability issues ahead of the 2026 midterm elections, the growth rate for average hourly earnings slowed down to 0.2 percent in September (slowing down from 0.3 percent in August and July) but rose 3.8 percent vs. the same month a year ago. August's growth rate was 3.7 percent, while the CPI annual inflation rate for September was 3 percent.
The odds of a December rate by the Federal Reserve remain finely balanced given the lack of new inflation data to silence the hawks while this report does not fully allay concerns regarding the depth of labor market weakness.
This report takes on added significance because the impact of the prolonged government shutdown forced the BLS to cancel the release of the October employment report.
Furthermore, the November jobs data which will also include information from the establishment survey for October - will not be published until December 16, meaning this report is the only official national employment datapoint Fed officials have in hand by the next FOMC meeting (Dec. 9-10).
U.S. non-farm payrolls expanded by 119,000 in September, following a revised 4,000 contraction in August (previously +22,000), and +72,000 in July (previously +79,000). Expectations in the Econoday survey of forecasters was for 50,000 jobs added. September 2024 saw the economy add 240,000 jobs.
The unemployment rate came in at 4.4%, up from 4.3% in August and compared to the consensus expectations for 4.3%. The labor force participation rate ticked up to 62.4% from 62.3% in August.
Private sector employment grew by 97,000, after adding just 18,000 jobs in August (revised down from +38,000 previously reported) and 56,000 in July (previously +77,000), compared to expectations for +60,000 in the Econoday survey. Within that, the service sector added 87,000 jobs, picking up after 50,000 jobs added in August and 72,000 created in July. The private sector added 240,000 jobs in September 2024.
The tariffs-impacted goods-producing sector saw a slight rebound in job creation, adding 10,000 jobs in September after 32,000 jobs were lost in August and down by 16,000 in July.
The manufacturing sector continues to shed workers, cutting 6,0000 workers following contractions of 15,000 and 9,000, respectively, in August and July.
The data on public sector employment does not capture the month and a half long government shutdown. Federal government employment continued to decline in September (-3,000) and has contracted by 97,000 since January.
In September, the average workweek for private sector employees was 34.2 hours for the fourth month in a row. In manufacturing, the average workweek edged down to 39.9 hours from 40.0 hours in August, but overtime remained unchanged at 2.9 hours. The average workweek for production and nonsupervisory employees increased by 0.1 to 33.7 hours in September.
Given the increased attention to the affordability issues ahead of the 2026 midterm elections, the growth rate for average hourly earnings slowed down to 0.2 percent in September (slowing down from 0.3 percent in August and July) but rose 3.8 percent vs. the same month a year ago. August's growth rate was 3.7 percent, while the CPI annual inflation rate for September was 3 percent.
Market Consensus Before Announcement
Here is the long-delayed September jobs report, the one that was supposed to come out on Oct. 3, now just a week before Thanksgiving!
With jobless claims receding from recent highs, the market is no longer in full freakout mode over the labor picture. The consensus sees job growth subdued again at 50K in September, slightly better than 22K in August. Firms are slow to hire but hoarding workers given the uncertain outlook. The consensus sees the jobless rate holding at 4.3 percent, not bad really.
With jobless claims receding from recent highs, the market is no longer in full freakout mode over the labor picture. The consensus sees job growth subdued again at 50K in September, slightly better than 22K in August. Firms are slow to hire but hoarding workers given the uncertain outlook. The consensus sees the jobless rate holding at 4.3 percent, not bad really.
Definition
The most closely watched of all economic indicators, the employment situation is a set of monthly labor market indicators based on two separate reports: the establishment survey which tracks 650,000 worksites and offers the nonfarm payroll and average hourly earnings headlines and the household survey which interviews 60,000 households and generates the unemployment rate.
Nonfarm payrolls track the number of part-time and full-time employees in both business and government. Average hourly earnings track employee pay while the average workweek, also part of the establishment survey, tracks the number of hours worked. The report's private payroll measure excludes government workers.
The unemployment rate measures the number of unemployed as a percentage of the labor force. In order to be counted as unemployed, one must be actively looking for work. Other commonly known data from the household survey include the labor supply and discouraged workers.
Nonfarm payrolls track the number of part-time and full-time employees in both business and government. Average hourly earnings track employee pay while the average workweek, also part of the establishment survey, tracks the number of hours worked. The report's private payroll measure excludes government workers.
The unemployment rate measures the number of unemployed as a percentage of the labor force. In order to be counted as unemployed, one must be actively looking for work. Other commonly known data from the household survey include the labor supply and discouraged workers.
Description
If ever there was an economic report that can move the markets, this is it! The anticipation on Wall Street each month is palpable, the reactions can be dramatic, and the information for investors is invaluable. By digging just a little deeper than the headline unemployment rate, investors can take more strategic control of their portfolio and even take advantage of unique investment opportunities that often arise in the days surrounding this report.
The employment data give the most comprehensive report on how many people are looking for jobs, how many have them, what they're getting paid and how many hours they are working. These numbers are the best way to gauge the current state as well as the future direction of the economy. Nonfarm payrolls are categorized by sectors. This sector data can go a long way in helping investors determine in which economic sectors they intend to invest.
The employment statistics also provide insight on wage trends, and wage inflation is high on the list of opponents of easy monetary policy. Fed officials constantly monitor this data watching for even the smallest signs of potential inflationary pressures, even when economic conditions are soggy. If inflation is under control, it is easier for the Fed to maintain a more accommodative monetary policy. If inflation is a problem, the Fed is limited in providing economic stimulus.
By tracking the jobs data, investors can sense the degree of tightness in the job market. If wage inflation threatens, it's a good bet that interest rates will rise; bond and stock prices will fall. No doubt that the only investors in a good mood will be the ones who watched the employment report and adjusted their portfolios to anticipate these events. In contrast, when job growth is slow or negative, then interest rates are likely to decline - boosting up bond and stock prices in the process.
Importance
The employment situation is the primary monthly indicator of aggregate economic activity because it encompasses all major sectors of the economy. It is comprehensive and available early in the month. Many other economic indicators are dependent upon its information. It not only reveals information about the labor market, but about income and production as well. In short, it provides clues about other economic indicators reported for the month and plays a big role in influencing financial market psychology during the month. Additionally, the Fed has made 6.5 percent unemployment a threshold for considering changes in policy - both for quantitative easing and the fed funds rate. And the Fed has emphasized that it is overall labor market conditions that matter - not just a specific number.
Interpretation
The bond market will rally (fall) when the employment situation shows weakness (strength). The equity market often rallies with the bond market on weak data because low interest rates are good for stocks. But sometimes the two markets move in opposite directions. After all, a healthy labor market should be favorable for the stock market because it supports economic growth and corporate profits. At the same time, bond traders are more concerned about the potential for inflationary pressures.
The unemployment rate rises during cyclical downturns and falls during periods of rapid economic growth. A rising unemployment rate is associated with a weak or contracting economy and declining interest rates. Conversely, a decreasing unemployment rate is associated with an expanding economy and potentially rising interest rates. The fear is that wages will accelerate if the unemployment rate becomes too low and workers are hard to find.
Nonfarm payroll employment indicates the current level of economic activity. Increases in nonfarm payrolls translate into earnings that workers will spend on goods and services in the economy. The greater the increase in employment, the faster is the total economic growth. When the economy is in the mature phase of an expansion, rapid increases in employment cause fears of inflationary pressures if rapid demand for goods and services cannot be met by current production.
When the average workweek trends up, it supports production gains in the current period and portends additional employment increases. When the average workweek is in a declining mode, it probably is signaling a potential slowdown in employment growth-or even outright declines in employment in case of recession.
Gains in average hourly earnings represent wage pressures. It is worth noting that these figures aren't adjusted for overtime pay or shifts in the composition of the workforce, which affects wages on its own. Market participants believe that a rising trend in hourly earnings will lead to higher inflation. But if increased wages are matched by productivity gains, producers likely will not increase product prices with wages because their unit labor costs are stable.
The employment data give the most comprehensive report on how many people are looking for jobs, how many have them, what they're getting paid and how many hours they are working. These numbers are the best way to gauge the current state as well as the future direction of the economy. Nonfarm payrolls are categorized by sectors. This sector data can go a long way in helping investors determine in which economic sectors they intend to invest.
The employment statistics also provide insight on wage trends, and wage inflation is high on the list of opponents of easy monetary policy. Fed officials constantly monitor this data watching for even the smallest signs of potential inflationary pressures, even when economic conditions are soggy. If inflation is under control, it is easier for the Fed to maintain a more accommodative monetary policy. If inflation is a problem, the Fed is limited in providing economic stimulus.
By tracking the jobs data, investors can sense the degree of tightness in the job market. If wage inflation threatens, it's a good bet that interest rates will rise; bond and stock prices will fall. No doubt that the only investors in a good mood will be the ones who watched the employment report and adjusted their portfolios to anticipate these events. In contrast, when job growth is slow or negative, then interest rates are likely to decline - boosting up bond and stock prices in the process.
Importance
The employment situation is the primary monthly indicator of aggregate economic activity because it encompasses all major sectors of the economy. It is comprehensive and available early in the month. Many other economic indicators are dependent upon its information. It not only reveals information about the labor market, but about income and production as well. In short, it provides clues about other economic indicators reported for the month and plays a big role in influencing financial market psychology during the month. Additionally, the Fed has made 6.5 percent unemployment a threshold for considering changes in policy - both for quantitative easing and the fed funds rate. And the Fed has emphasized that it is overall labor market conditions that matter - not just a specific number.
Interpretation
The bond market will rally (fall) when the employment situation shows weakness (strength). The equity market often rallies with the bond market on weak data because low interest rates are good for stocks. But sometimes the two markets move in opposite directions. After all, a healthy labor market should be favorable for the stock market because it supports economic growth and corporate profits. At the same time, bond traders are more concerned about the potential for inflationary pressures.
The unemployment rate rises during cyclical downturns and falls during periods of rapid economic growth. A rising unemployment rate is associated with a weak or contracting economy and declining interest rates. Conversely, a decreasing unemployment rate is associated with an expanding economy and potentially rising interest rates. The fear is that wages will accelerate if the unemployment rate becomes too low and workers are hard to find.
Nonfarm payroll employment indicates the current level of economic activity. Increases in nonfarm payrolls translate into earnings that workers will spend on goods and services in the economy. The greater the increase in employment, the faster is the total economic growth. When the economy is in the mature phase of an expansion, rapid increases in employment cause fears of inflationary pressures if rapid demand for goods and services cannot be met by current production.
When the average workweek trends up, it supports production gains in the current period and portends additional employment increases. When the average workweek is in a declining mode, it probably is signaling a potential slowdown in employment growth-or even outright declines in employment in case of recession.
Gains in average hourly earnings represent wage pressures. It is worth noting that these figures aren't adjusted for overtime pay or shifts in the composition of the workforce, which affects wages on its own. Market participants believe that a rising trend in hourly earnings will lead to higher inflation. But if increased wages are matched by productivity gains, producers likely will not increase product prices with wages because their unit labor costs are stable.
