U.S. September jobs gain limited to 29,000 in 'shock'; unemployment rises to 4.2%

[Financial News] The United States added far fewer jobs than expected in September, indicating that the previously strong labor market is rapidly losing momentum. The unemployment rate also edged up from the previous month to 4.2%.
According to data released on the 2nd (local time) by the United States Department of Labor (U.S. Department of Labor)'s Bureau of Labor Statistics (BLS), nonfarm payroll employment increased by a net 29,000 jobs from the previous month in September. The figure fell far short of the 80,000-to-90,000 forecast from Dow Jones and other market experts. Private-sector employment rose by 46,000, but public-sector employment, including jobs in the federal, state and local governments, declined by 17,000, weighing on the overall gain.
The slowdown in employment was also evident in downward revisions to data from the previous two months. The August job gain, initially reported as a strong 162,000, was cut by 29,000 to 133,000, while July's figure was revised down by 31,000 to a net decline of 10,000 jobs. The combined revisions for the two months amounted to a negative 40,000, dashing the optimism seen in August that average monthly net job gains were holding at an appropriate level.
The September unemployment rate, calculated through a separate household survey, came in at 4.2%, up 0.1 percentage point from both the previous month and the market forecast of 4.1%. However, the increase appears to have resulted from growth in the labor force rather than from people giving up their job searches. The labor force expanded by 485,000 over the month, while employment increased by 406,000. The resulting difference of 79,000 meant that the number of unemployed people rose, pushing up the unemployment rate arithmetically. At the same time, the labor force participation rate relative to the working-age population rose 0.2 percentage point to 61.8%, and the employment-population ratio increased 0.1 percentage point to 59.2%, both showing positive trends.
The employment shock is expected to slow the Federal Reserve's (Fed) future monetary policy course. After holding its benchmark interest rate steady five times, the Fed unexpectedly raised it by 0.25 percentage point on the 16th of last month. Further increases had been anticipated based on the strong labor market and inflation in the 3.4% range. However, the unexpectedly weak September employment report has reduced the momentum for additional tightening by the Fed. Market attention is now focused on the Consumer Price Index (CPI) figure due to be released on the 14th.

[email protected] Park Ji-hyun Reporter