The US economy added just 29,000 jobs in September, marking a sharp slowdown from the downwardly revised 133,000 jobs added in August and falling well short of the 88,000 expected in a Bloomberg poll of economists. Hiring decelerated across multiple sectors, including healthcare, while financial sector employment continued to contract. Payrolls for July and August were revised lower by a combined 60,000 positions, with July showing a loss of 10,000 jobs. The unemployment rate climbed to 4.2 per cent from 4.1 per cent.
"Today's soft payroll report demonstrates that the labour market is simmering, not boiling," said Jeff Schulze, head investment strategist at Franklin Templeton. Adam Schickling, senior economist at Vanguard, noted the report strengthens the case for the Federal Reserve to remain patient, as the labour market has neither deteriorated sharply nor meaningfully strengthened.
Market bets on an October rate rise fell from 29 per cent to about 22 per cent following the data. The two-year Treasury yield initially dropped 0.09 percentage points to 4.69 per cent before recouping losses. Thomas Simons, chief US economist at Jefferies, said the number should be the nail in the coffin for an October hike. Despite this, traders still expect further Fed rate increases, with an 86 per cent chance of higher rates by year-end.
Source: Financial Times Markets · Summarized by HeadlinesBriefing