US Jobs Rise by Only 29 Thousand in September and Unemployment Climbs to 4.2%

Official data showed that nonfarm payrolls in the United States increased by only 29,000 in September, compared to economic expectations ranging between 84,000 and 90,000, in a negative surprise that pushed the unemployment rate up from 4.1% to 4.2%.

The August reading was revised down by 29,000 to 133,000, while July's reading was revised to a decline of about 10,000 jobs, bringing total negative revisions for the previous two months to 60,000 jobs. This deepens the picture of a slowdown in the US labor market and increases the extent of the actual decline relative to initially announced figures. Investors are monitoring whether this slowdown is temporary or the beginning of a broader trend in the US labor market.

Financial markets reacted to the data, as S&P 500 futures rose 0.4% and the yield on 10-year US Treasury bonds dropped to 5.22%, amid repricing of monetary policy expectations for the coming period.

Market traders reduced their pricing of the probability of an interest rate hike at the Federal Reserve meeting scheduled for October 27 and 28. Employment data is one of the most influential indicators in Fed decisions, as it tracks it to assess inflationary pressures and demand in the economy, giving September's data added significance. Meanwhile, emerging market investors are monitoring its impact on capital flows and the value of the dollar.

What do these terms mean?

Nonfarm payrolls: A monthly measure of the number of new jobs created outside the agricultural sector in the United States. Unemployment rate: The percentage of unemployed individuals in the total labor force. Treasury yield: The interest paid by US government debt, which rises with expectations of higher interest rates or higher inflation. The Fed: The US central bank responsible for monetary policy.