In September, U.S. employers surprised by adding 119,000 jobs, even as the unemployment rate reached 4.4% compared to the same month last year, the highest in two years, according to a key economic report released by the Department of Labor (DOL) after a seven-week delay due to the federal government shutdown.
DOL revisions in September showed that the economy created 911,000 fewer jobs than initially estimated for the year ending in March. This means employers added an average of just 71,000 new jobs per month during that period, instead of the 147,000 initially estimated.
The 4.4% unemployment rate in September is the highest since October 2021, up from the 4.3% recorded in August, the most recent data. While the job growth reflects the return of 470,000 people to the labor market—either working or looking for jobs—in September, not all found work immediately.
Since March, job creation has slowed even further, averaging 53,000 per month. Meanwhile, during the hiring boom of 2021-2023, the economy added 400,000 jobs per month.
The U.S. Labor Market in September
While the result more than doubled experts’ estimates of 50,000 jobs created for September, DOL revisions showed that the economy lost 4,000 jobs in August, instead of the 22,000 initially reported as gained. In total, revisions reduced payrolls by 33,000 for July and August.
By sector, healthcare and social assistance companies added over 57,000 jobs in September, construction firms added 19,000, and retailers nearly 14,000. However, factories lost 6,000 jobs, and the federal government lost 3,000.
It is expected that the tough immigration policy implemented by President Donald Trump will reduce the number of people seeking work, which could mean the economy can create fewer jobs without raising the unemployment rate.
Average hourly wages rose just 0.2% from August and 3.8% from the same month last year, nearing the Federal Reserve (Fed) governors’ anticipated annual increase of 3.5%.
Economists expected the spring and summer trend to continue: few hires but few layoffs, a combination that means most employed Americans enjoy job security, but those who are unemployed struggle to find work.
The labor market has also been affected by the lingering effects of high interest rates implemented to combat the high inflation generated between 2021 and 2022 and the uncertainty surrounding Donald Trump’s presidential campaign to impose global tariffs.
Economic Uncertainty
This report is significant because during the 43-day U.S. government shutdown, investors, businesses, lawmakers, and the Fed itself made decisions blindly while trying to assess the health of the U.S. labor market amid the lack of information caused by the suspension of non-essential federal workers.
Thus, this report arrives at a time of strong economic uncertainty, in which the labor market has been impacted by high interest rates and the erratic tariff policy implemented by Donald Trump. However, mid-year economic growth remained solid.
Regardless, Fed governors are divided on whether they will cut interest rates for the third time this year when they meet next month.
Once September’s figures were published, businesses, investors, policymakers, and the Fed will have to wait to analyze labor market data in detail.
However, the Labor Department announced yesterday that it will not be able to release the full October employment report because it could not calculate the unemployment rate during the government shutdown. To compensate, it will release October’s employment data, including last month’s job creation, alongside the full November employment report on December 16, with a couple of weeks’ delay.
This information will be the last complete measure of hiring and unemployment that Fed policymakers will have before meeting on December 9 and 10 to decide whether to cut their benchmark interest rate for the third time this year.
Unemployment Benefit Claims Remain Stable
Another report released Thursday shows that new unemployment benefit claims decreased last week, remaining within the healthy range of recent years, according to the government’s first weekly layoff data since before the government shutdown on October 1.
The number of Americans who filed for unemployment benefits as of November 15 fell by 8,000 to 220,000, according to the DOL.
This report also covers the government shutdown period, during which claims remained in a similar range, between 200,000 and 250,000.
The four-week average of unemployment benefit claims fell by 3,000 to 224,250.
The total number of Americans receiving unemployment benefits in the week ending November 8 rose to 1.97 million, an increase of 28,000 from the previous week.
Image: DiarioNY
