The September US jobs report shows a weakening labor market, with only 29,000 nonfarm positions added, far below market expectations, though the unemployment rate remains near historic lows.

This data released on Friday is the last employment report before the November midterm elections.

The US added 29,000 jobs in September, significantly below market expectations. This indicates that the labor market remains generally stable but is no longer able to sustain large-scale job growth as it once did.

Key Data

The new jobs figure came in well below analysts' expectations of 84,000. Monthly employment data is inherently volatile, so investors and policymakers typically pay more attention to the unemployment rate, which has remained at low levels throughout the year.

The US Labor Department reported on Friday that the unemployment rate edged up to 4.2%, higher than last month's 4.1%, but still at a historically low level, reflecting a broadly healthy labor market. Economists had expected the unemployment rate to remain at 4.1%.

What It Means for the Fed

The Fed's policy focus has shifted from boosting employment to fighting inflation. Last month, the Fed hiked rates for the first time in three years, attempting to suppress stubbornly high price growth that remains above target levels. A major reason behind the policy shift: the central bank judges that the job market is in good shape and no longer needs as much monetary stimulus. Fed Chair Kevin Warsh said at a September press conference: "A wide range of data, including the labor market, shows the economy has strengthened."

Current State of the Job Market This Year

Public layoff announcements from large companies have decreased. Data from outplacement firm Challenger, Gray & Christmas shows that announced layoffs in August hit their lowest level for the same period since 2022. Due to a sharp decline in immigration, the number of new jobs needed to keep the unemployment rate stable has also decreased. Many companies have entered a "low hiring, low firing" mode: unwilling to lay off existing employees on a large scale, while also not actively bringing in new hires.

Bond Market Selloff Background

Against the backdrop of a bond market selloff, investors are paying particularly close attention to this employment data. Earlier this week, US Treasury yields hit a 24-year high before pulling back; mortgage rates surged, posting their largest weekly increase in four years, causing many potential homebuyers to hold off. A large number of American workers are no longer switching jobs easily.

Impact on the Midterm Elections

The data released on Friday is the last employment report before the November 3 midterm elections. Multiple polls show that voters' pessimism about the economy is deepening, sentiment that typically hurts the ruling party. A University of Michigan survey shows consumer confidence near historic lows.

The Impact of Artificial Intelligence

Some economists worry that artificial intelligence is about to bring mass unemployment, but there is no conclusive evidence yet that automation is eliminating white-collar jobs on a large scale. On the contrary, massive investment in data centers has actually boosted the labor market. Estimates from LinkedIn show that from early 2023 to the end of September, the US added jobs related to data annotation and data center operations, not yet counting construction roles. Electricians and plumbers have seen significant increases in hours and income. Morgan Nikko Securities US economist Ruchir Sharma said: "There are clear signs that data center investment is having a positive spillover effect on the job market."