The first official update on the US labor market in weeks revealed a surprising pickup in hiring after a sluggish summer. Employers added 119,000 jobs in September, more than double many analysts’ expectations, according to Labor Department data released on Thursday. Despite the gain, the unemployment rate edged up slightly from 4.3% to 4.4%.
The numbers had been delayed for nearly seven weeks due to the US government shutdown, which ended last week. Policymakers had been left uncertain about employment trends at a sensitive time for the economy, as the Federal Reserve prepares for its December meeting. The report showed that while some sectors are adding workers, overall hiring remains limited compared with the post-pandemic recovery, leaving pressure on the Fed to decide on further interest rate adjustments.
Growth in July and August was also revised downward, with only 72,000 jobs added in July and a loss of 4,000 in August. Analysts noted that the mixed data may prompt the Fed to proceed cautiously. Art Hogan, chief market strategist for B Riley Wealth, described the situation as “driving in a fog,” echoing Chair Jerome Powell’s advice to slow down amid uncertainty.
The report highlighted strains in specific groups, particularly among those with college degrees. The unemployment rate for this group rose to 2.8% last month, up from 2.3% a year earlier. Recent graduates are facing challenges in entering their chosen fields, with many citing difficulties in securing office or tech positions. Mason Leposavic, 24, described the job hunt as “dispiriting,” saying AI developments have transformed hiring practices in the tech industry and limited opportunities for entry-level roles.
Job cuts have also surged, with October seeing the highest number of layoffs for the month since 2003, according to outplacement firm Challenger, Gray & Christmas. Major companies, including Amazon, Target, and UPS, announced reductions, raising concerns about potential weaknesses in the traditionally “low-hire, low-fire” US labor market.
Economic uncertainty is compounded by rising consumer costs and cautious spending among lower-income households, even as a strong stock market continues to support higher earners. Fed officials are balancing the strength in hiring with inflation concerns, which ticked up to 3% in September, above the central bank’s 2% target.
Since September, the Fed has cut its benchmark interest rate twice, bringing it to 3.75%-4%, its lowest level in three years. Powell has cautioned that another rate reduction in December is not guaranteed, noting state-level data that shows no significant increase in unemployment claims. Analysts say the September report, combined with limited October data, will be a key reference for policymakers as they weigh their next steps.
While the September gains exceeded expectations, the broader picture remains mixed, with slow hiring, rising layoffs, and AI-driven changes shaping the labor market ahead of the winter months.
