The September jobs report, delayed from its initial October 3 release date due to the record-long government shutdown, came in higher than expected. While this is good news for those worried about a sharp slowdown in the labor market, it does keep the odds of a December rate cut low.
According to the Bureau of Labor Statistics (BLS), nonfarm payrolls rose by 119,000 in September, beating economists' estimate for 50,000 new jobs. Figures for July were revised down by 7,000, from +79,000 to +72,000, while those for August were revised lower by 26,000, from +22,000 to -4,000.
These revisions result in 33,000 fewer jobs combined in July and August than previously reported.
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As for September, job gains were seen in health care (adding 43,000) and social assistance (adding 14,000). However, federal government jobs declined by 3,000, and are now down by 97,000 since January.
The unemployment rate, which is calculated from a separate survey, ticked up to 4.4% from 4.3%. The data also showed that wage growth was 0.2% higher month over month in September and up 3.8% year over year.
"The delayed September employment data will likely not have had enough of an impact to convince the Fed to cut at the December meeting," says Ryan Weldon, investment director and portfolio manager at IFM Investors. "The minutes from the October meeting revealed clear apprehension from more than a few Fed members regarding support for a December cut, and the cancellation of the October jobs report due to the government shutdown will only reinforce a cautious approach in December."
Weldon adds that the Federal Reserve still considers the federal funds rate to be in restrictive territory, "but the data uncertainty and conflicting inflation and employment pressures will keep them cautious until the macro backdrop clears up."
According to CME Group's FedWatch, futures traders are now pricing in a 58% chance the Fed will keep interest rates unchanged when it concludes its next meeting on Wednesday, December 10, up from 1% one month ago. Odds are at 50% that the central bank will cut rates by a quarter-percentage point when it meets in January.
With the September jobs report now in the books, here's some of what economists, strategists and other experts around Wall Street have to say about the results and what they could mean for the Fed and investors going forward.
Experts' takes on the September jobs report and what it means for the Fed
"Thursday's jobs report was much stronger than expected and it's possible that the Federal Reserve may take more of a wait-and-see approach to rates in December, especially since there is still uncertainty over the economic data, which has only first started to come back online after the drought from the government shutdown. Thursday's jobs report suggests that the labor market is not as weak as feared." – Alexander Guiliano, Chief Investment Officer at Resonate Wealth Partners
"The Fed's decision when they meet in December is a tricky one, but there's a good chance that would be the case even with all of the data in hand. With risks to both sides of their dual mandate at odds, they're seeking clarity in an incomplete picture. We don't yet know when the next batch of consumer inflation data will be released, and this will be the last jobs report before their meeting. Fortunately, they will get some insight into the actual state-of-play in layoffs when the October JOLTS report is released the first day they convene." – Elizabeth Renter, Senior Economist at NerdWallet
"This combination — solid job gains and stable pay growth — complicates the Federal Reserve's task: it shows that labor demand remains firm, even as the Fed seeks clearer signs of cooling before committing to rate cuts. Interestingly, the initial reaction saw markets pricing in a higher chance of a cut likely focusing on the unexpected rise in the unemployment rate. As a result, the dollar pared back some of its daily gains, as did yields, whilst the stock market took it as another sign to build on yesterday's reversal. However, this momentum may fizzle out quickly as the data is digested further, with the potential for a continuation in the dollar rebound as markets reassess the rate cut odds." – Daniela Hathorn, Senior Market Analyst at Capital.com
"A December cut remains possible given continued labor market softness as expressed by the unemployment rate. Weak hard data and close-to-target inflation look set to drive policy going forward, despite recent hawkish noises. The setup is in place for Powell to continue his risk-management approach to the labor market before his term as Chair expires in May." – Kay Haigh, Global Co-Head of Fixed Income and Liquidity Solutions at Goldman Sachs Asset Management
"The one-two punch of a stellar Nvidia earnings report last night and a better-than-expected September jobs report this morning should give the market a boost, given that it directly addresses the two biggest concerns of the bears: an AI bubble and a moribund economy." – Chris Zaccarelli, Chief Investment Officer for Northlight Asset Management
"Although job cut announcements have risen, actual layoffs remain tame as evidenced by this morning's decline in initial jobless claim filings back toward recent lows. We believe the December Fed meeting remains a toss-up, with the hawkish case being bolstered by strong headline job creation and the dovish case supported by the rise in the unemployment rate to 4.4%. More immediately, today's payrolls release is being viewed as a 'good news is good news' dynamic for equities, which we believe is appropriate given that today's data does not show downside risks to labor materializing while keeping the prospect for further rate cuts alive, whether next month or in 2026. This dynamic should provide support for risk assets in the near term." – Jeff Schulze, Head of Economic and Market Strategy at ClearBridge Investments
"September's long-awaited jobs report offers a reminder that the labor market is cooling — and maybe faster than the headlines suggest. Payrolls rose 119,000, a mild upside surprise, but the unemployment rate climbed to 4.4 percent and is now closing in on the Fed's 4.5 percent projection ahead of schedule. The underlying trend is softer than it looks. That's why the more aggressive tone from the Fed lately feels misplaced. Inflation has eased ex-tariff related goods, labor slack is building, and today's data is stale and mixed at best. Tightening the screws now risks leaning into a slowdown already in motion." – Timothy S. Chubb, Chief Investment Officer at Girard
"From an investment perspective, we are all really looking for any signs of direction in the overall employment picture. Monthly payroll gains are part of that, but they are only one piece. Another indicator that can offer early insight is the quits rate. When people are less willing to quit, it generally means they know that finding a new job, especially a better job, is unlikely, which can portend higher unemployment." – Katie Klingensmith, Chief Investment Strategist at Edelman Financial Engines
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