An overdue U.S. Labour Department report released Thursday shows employers added 119,000 jobs in September. Meanwhile, the unemployment rate ticked up to 4.4%, underscoring a labour market that is losing steam.
The data, published nearly seven weeks late because of the recent government shutdown, will be the last official snapshot of employment until mid-December. The shutdown also disrupted data collection. Consequently, no separate October jobs report will be issued and some October inflation figures may never be released.
Despite being dated, the report offers important clues about hiring trends this fall. Job gains in September were concentrated in health care and hospitality. However, factories, warehouses, and the federal government shed jobs. State and local governments continued to expand their payrolls.
Job Market Declining
Revisions show the job market was even softer over the summer than initially thought. July and August employment gains were marked down by a combined 33,000 jobs.
For much of this year, employers have been in what Federal Reserve Governor Chris Waller calls a “no-hire/no-fire” mode. They were reluctant to significantly expand staff but also slow to conduct mass layoffs. However, that may be changing.
“Four to six weeks ago, we were still in this kind of no-hire/no-fire mode,” Waller told economists in London this week. “Business leaders are starting to talk about layoffs and plan for them in the future.” Major companies have already announced cuts. These include Amazon with 14,000 job losses and Verizon with 15,000.
Waller argues the central bank should cut interest rates again at its next meeting to support demand and protect the cooling labor market. But minutes from the Fed’s most recent policy meeting reveal deep divisions among officials. Many policymakers favor holding rates steady for the rest of the year. They cite inflation that remains stuck above the Fed’s 2% target.
Part of that persistent inflation is tied to President Trump’s tariffs, which have pushed up the cost of imported goods. Trump has imposed the highest tariff levels since the Great Depression. Roughly half of those levies are currently being challenged before the U.S. Supreme Court as unconstitutional.
Ordinarily, Fed officials would have October and November employment data in hand ahead of their next rate decision. However, the shutdown-driven delays mean they’ll have to rely more heavily on anecdotal evidence. Businesses such as Target and McDonald’s report that customers are becoming more cautious in their spending.
Waller insists the Fed is not “flying blind,” but weaker job gains, mounting layoff plans and jittery consumers all point to a labor market facing growing pressure just as policymakers weigh whether to ease interest rates or keep them elevated in the fight against inflation.
