September Report

The Bureau of Labor Statistics (BLS) released its September jobs report on Thursday.

Context

The jobs report was released nearly seven weeks late due to the government shutdown that lasted over 40 days and ended in mid-November. The shutdown, which was the longest on record, delayed numerous economic reports that the Federal Reserve and investors typically use to assess the economy. The September data provided the first official snapshot of the labor market before the shutdown began on October 1.

Job Growth

The BLS released its September jobs report on Thursday, showing that the US added 119,000 jobs in September. The figures exceeded economists' expectations of around 50,000 and showed the strongest job growth since April.

The September increases were concentrated in healthcare, leisure and hospitality, retail, construction, and government sectors, while transportation, warehousing, and temporary help services saw job losses. However, employment figures for July and August were revised downward by a combined 33,000 jobs.

Rising Unemployment

The unemployment rate increased from 4.3% in August to 4.4% in September, reaching the highest level since 2021. Nearly 500,000 people joined the labor force during the month, pushing up the participation rate (the percentage of people who are employed or actively looking for work) to a four-month high.

The number of underemployed people who had been working part-time declined the most in a year, suggesting more workers found full-time positions. However, permanent job losers – people whose jobs were eliminated rather than temporarily laid off – rose to the highest level since late 2021. Despite the unemployment increase, separate data suggests that layoffs had not risen sharply during the shutdown.

Fed Implications

The mixed report deepened divisions at the Fed over whether to cut interest rates at its December 9-10 meeting. Some officials pointed to the job growth as a reason to pause rate cuts, while others focused on the rising unemployment rate as justification for another reduction. 

Fed Chair Jerome Powell previously said another December cut was "not a foregone conclusion." The Fed has already cut interest rates twice this year by 0.25 percentage points each time, and the probability of a December rate cut stood at around 40% following the report.