The U.S. labor market showed signs of moderation in September, with job growth slowing and the unemployment rate holding steady at 4.1% for a third consecutive month, according to economists' forecasts ahead of Friday’s release of the Bureau of Labor Statistics’ employment report.
Economists surveyed by Reuters and Dow Jones projected that nonfarm payrolls increased by 90,000 jobs in September, a decline from August’s unexpectedly strong gain of 162,000 jobs. Estimates varied widely, ranging from as low as 35,000 to as high as 180,000 new jobs. The unemployment rate is expected to remain unchanged at 4.1%, a level many analysts associate with full employment.
The September report follows a volatile summer of labor market data, including a surprise jump in August that some economists attributed to seasonal adjustment anomalies. Barclays chief U.S. economist Marc Giannoni noted that August’s initial payroll print may be revised downward, as the Bureau of Labor Statistics (BLS) extends its seasonal adjustment procedures to incorporate September data. Giannoni estimated that if August’s data had been adjusted using 2025 seasonal factors, it would have shown a decline of 74,000 jobs instead of the reported gain.
Federal Reserve officials have signaled that they are closely monitoring labor market conditions, though recent commentary suggests a more cautious stance on further interest rate hikes. New York Fed President John Williams stated this week that there is “no need for urgency” in additional rate increases, emphasizing that the labor market remains solid. Fed Vice Chairman Philip Jefferson echoed this sentiment in a speech Thursday, noting that job creation has stabilized and layoffs remain low, though he acknowledged some volatility in payroll gains.
Economists also reported no immediate signs that geopolitical tensions in the Middle East, including the U.S.-Israel conflict with Iran, were disrupting the labor market. However, they warned that ongoing conflicts could pose future headwinds, such as elevated energy prices and supply chain strains.
The BLS is scheduled to release the official September jobs report on Friday, with market participants and policymakers alike awaiting confirmation of whether the labor market’s momentum is slowing as expected or if August’s surge was an outlier.
Key Takeaways:
- Job growth slows to 90,000 in September, down from August’s 162,000.
- Unemployment rate holds at 4.1% for the third straight month.
- Fed officials downplay urgency for further rate hikes, citing a stable labor market.
- August’s strong jobs numbers may be revised lower due to seasonal adjustment quirks.
- Geopolitical risks in the Middle East remain a potential concern for future economic stability.